Tourism is one of the largest and fastest growing industries in the United Kingdom. According to official reports, the growth rate of the UK tourism was 4.1% in 2011 while the country’s economy growth rate was merely 0.7% in the same year. Statistics also show that between 2010 and 2012, tourism supported 1/3 of the new employment opportunities in the country. British Tourist Authorityforecasted that by 2025, with a growth rate faster than the nation’s economy, this industry is predicted to worth£257 billion, which shares around 10% of the country’s total GDP and significantly supports the nation’s employment. Both overseas tourism and sub-national tourism affect the nation’s economy.
This paper will discuss economic effects of tourism on the UK from six aspects–macro economy, employment, enterprises, investment, consumer spending and agriculture. They are then followed by a special analysis on the impact of 2012 London Olympic Games on the economy.
Effects of tourism on UK’s economy
1. Macro economy (contribution to GDP)
A report issued by the World Travel & Tourism Council (WTTC) in 2013 divides the total contributionof travel and tourism to GDP into three categories. The first category, accounting for 2.4 percent of 2012 GDP, is called direct contribution, defined as spending of tourists, such as spending on services of restaurants, hotels and travel agencies.The second category is indirect contribution, including investment in the travel industry and spending of service providers. For example, construction of facilities in a resort area and products and services acquired by a restaurant or a hotel in order to offer to tourists both fall intothis category. There’s also inducedcontributionmade to UK’s economy,displayed as spending of employees on the supply side of tourist industry. All three types of contribution are integrated to up to £106.3 billion, which stands for 6.8% of the UK’s GDP in 2012.
Another important benefit of tourism growth is creating jobs. Increasing tourists bring expanding demand for related products and services, along with demand for personnel. Ten percent of businesses in the UK was covered by businesses in sectors of visitor economy (Office for National Statistics, 2012), which provide plentiful job opportunities for the country.According to the WTTC report, the number of jobs directly or indirectly contributed by T&T in 2012 is 2,420,000, which is around 7.6 percent of the UK’s total employment of that year.
Apart from positive effects of tourism on employment in general, tourism also helps reducing the imbalances in employment. One reason is that there are less high-skilled or well-trained workers needed in the supply chain of tourism. For example, Deloitte (2008)has studied about job opportunities provided to unskilled workers by the tourism industry and found that the phenomenon is most seen in Northern Ireland and Wales, where visitor economy hires significantly higher proportion of...