Aviation can deliver £200 billion post-Brexit economic stimulus – supercharging Government’s Global Britain ambitions
8th July 2021
- New CEBR report highlights how aviation could be the cornerstone of the UK’s Global Britain ambitions, helping industry deliver a £204bn trade bonanza which could benefit every corner of the UK.
- Heathrow, which already facilitates nearly half of all UK trade by value with CPTPP countries, is best placed to help UK firms pivot and grow trade with high value economies post-Brexit.
- Trade to non-EU countries through Heathrow could grow by 11% by 2025 with regions specialising in high value manufacturing, including the North East and the Midlands, set to benefit most as the UK establishes new trading relationships.
New research highlights how the UK could undergo an economic pivot post-Brexit, with non-EU trade potentially increasing by 20% over the next five years from nearly £473 billion in 2019 to £570 billion in 2025.
According to the Centre for Economics & Business Research, aviation will need to be at the heart of this pivot. The findings suggest that the value of trade through Heathrow to non-EU countries could increase by 11% by 2025, while trade with EU countries decreases by 7% over the same period. Regions across the UK would benefit from these new trading links, with Heathrow playing a key role in opening up valuable new markets from the Asia Pacific and Australia to the US.
Aviation is critical to the Government’s plans for a Global Britain post-Brexit. Heathrow alone has the potential to facilitate a £204 billion trade bonanza benefitting British businesses in every corner of the country, creating opportunities for the entire aviation sector and strengthening the UK’s trade network.
However, this trade boost won’t be realised unless the UK’s aviation industry is supported by Government policies and allowed to resume. Industry figures for May show that some of the European competitors that benefitted from sector specific support during the pandemic, such as the Netherlands and Germany, are seeing the fastest growth. Cargo tonnage at the UK’s hub airport is still down 19% on 2019 levels, compared to both Schiphol and Frankfurt which have surpassed their 2019 levels, growing by 14% and 9% respectively over the same time period.
This research comes as Heathrow works with British Airways and Virgin Atlantic to launch trials that aim to help Government and industry understand how to practically ease restrictions for fully vaccinated passengers, a move which is key for restarting travel and trade. By capitalising on the country’s vaccine dividend, ministers can help to deliver this economic stimulus for exporters across Britain, ensuring the UK retains its competitive edge as the country comes out of lockdown.
The Global Britain report reveals that:
- By 2025, the value of trade through Heathrow could grow to over £204bn (up from £188bn in 2019), representing 21.2% of the UK’s total trade in goods and 14.6% of our trade in goods and services.
- The growth in trade could boost every part of the UK. Regions with high manufacturing propensities – including the Midlands and North East – are likely to benefit most from future trade agreements with fast growing economies around the world. Scotland and Wales could also benefit from increased trade in agriculture, forestry and fishing.
- Heathrow could help drive future Free Trade Agreements – with 46% of trade by value with CPTPP countries facilitated through the airport – while the airport is ideally placed to play a major role in deals with the US and Australia.
- Heathrow is a major facilitator of UK trade accounting for two thirds of all trade transported by air in the UK (by value), with this figure rising to over 75% for non-EU trade.
- While 90% of the UK’s trade by volume is transported by sea, high value goods are transported by air. Heathrow is the UK’s largest port by value, accounting for 21.2% of UK trade in goods by value in 2019.
The new research reaffirms the importance of the global hub airport model to the UK post-Brexit and to Britain’s ambitious exporters which rely on aviation trade routes. The hub model helps to drive trade growth, by pooling demand for global connections and providing more choice of destinations for passengers, businesses and entrepreneurs, exporters and importers.
Heathrow CEO John Holland-Kaye said: “Heathrow is well placed to supercharge the Government’s Global Britain ambitions and deliver a post-lockdown, post-Brexit economic stimulus worth billions of pounds. As the UK’s only hub airport and largest port by value, we are ready to play a central role in creating economic opportunities for businesses across the country, facilitating new free trade agreements and serving as a vital link to our key trading partners. Ministers must seize the opportunity to secure this crucial economic boost by backing British aviation and its own vaccination programme by safely easing travel restrictions for fully vaccinated passengers from July 19th.”
Minister for Exports Graham Stuart MP commented: “As we continue to strike free trade agreements with countries across the world, our airports will play an important role in the UK’s global ambitions – from our accession to CPTPP to the recently-signed UK-Australia trade deal.
“Our trade policy agenda will help to level up all parts of the UK, reduce tariffs and cut red tape for businesses. Support from the aviation sector will help to facilitate this, ensuring the even smoother journey of UK exports to key markets such as New Zealand, the Middle East and India.”
The research has also been welcomed by regional businesses, with Dai Hayward, CEO of Micropore Technologies based in Teesside, saying: “Micropore Technologies Ltd is an award-winning technology solutions provider to the global pharmaceutical and biopharmaceutical sector. Because of the global nature of our business a well-connected airport hub for both passenger and freight traffic is vital. Heathrow provides exactly this, especially now that daily flights from our local airport, Teesside International, have resumed as a result of Tees Valley Mayor, Ben Houchen’s, efforts. We look forward to being able to resume travelling from Heathrow to the parts of the world where our technology has gone during the pandemic.”
To showcase the work of British businesses up and down the country that export their goods and services via Heathrow, the airport will also be launching a Global Britain Business Champions campaign in coming months. These businesses have kept the country trading over the last year and are set to play a central role in driving a global Britain in the years ahead.