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Government partnership with logistics could unlock £3.9 billion in economic growth, says Logistics UK

More targeted government investment could boost GDP by £3.9 billion per annum by 2030 according to Oxford Economics and Logistics UK.
Logistics UK

More targeted government investment – combined with action to improve the flow of goods across borders and a commitment to work in closer partnership with the logistics sector – could boost GDP by £3.9 billion per annum by 2030, and generate enough revenue to finance the salaries of 20,000 nurses according to a new independent report by Oxford Economics on behalf of business group Logistics UK.

‘Logistics: Delivering a solution to the UK’s productivity puzzle’ outlines how the ability of UK’s logistics system to support greater competition and efficiency in the UK economy is being held back by challenges caused by border friction and a lack of investment in national infrastructure, innovation and skills – which, if addressed, could also result in an increase in annual household disposable income.

The UK’s economy faces a productivity challenge at present, but logistics can be a big part of the solution. This report, conducted on our behalf by Oxford Economics, emphasises how improving the productivity of the logistics sector, one of the UK’s most significant economic contributors, would have a positive impact on the whole economy.

However, the findings also suggest that reversing the UK’s decline in productivity and delivering these gains is beyond the control of industry operators alone and will take concerted effort and investment by government.

To ensure that the nation’s decline in productivity is addressed, it is imperative that government works with the sector to establish a cross-Whitehall Logistics Productivity Forum, to maximise the benefits that this sector can deliver to the whole economy.

David Wells, Chief Executive of Logistics UK

With the UK currently in joint 19th position in the World Bank logistics rankings – a substantial drop from an average ranking of 6th between 2012 and 2018 – the report, sponsored by Amazon and Volvo Trucks, outlines how a return to the top ten would unlock a significant boost in GDP through productivity gains.

As Mr Wells continues, this would not only result in an approximate £80 per annum increase to the annual income of the UK’s 30 million households – a £2.3 billion boost to domestic budgets by 2030 – but could also raise enough in additional taxation to finance the annual salaries of more than 20,000 nurses. If the UK was to become a global leader in logistics, this benefit would be doubled to £7.9 billion a year.

To deliver the gains outlined in this report, the logistics sector requires government to work in strategic partnership with the private sector to deliver improved infrastructure, reduce friction at the country’s borders to boost trade, resolve skills gaps and invest in innovation to drive efficiency.

David Wells, Chief Executive of Logistics UK

The new analysis also highlights that, while there would be a significant economic benefit for the UK from addressing these challenges to close the gap with other nations, this must be achieved alongside delivering the transition to a green economy. 

If the UK gets the transition to net zero right, it will align with long term higher productivity. In the short-term, significant levels of investment are required to make the necessary switch efficiently. Both public and private investment needs to avoid stranded assets. The logistics sector and government must work in partnership ensure that taxpayer and private investment in the transition delivers value for money and supports, rather than hinders, economic growth.

Government support is vital to support the pace of change required, to prevent a loss in private sector efficiency, and ensure a smooth transition for all sectors of the economy.

David Wells, Chief Executive of Logistics UK

Our analysis highlights the potential value that can be gleaned by enhancing the UK’s logistics performance, by improving the predictability, timeliness and value-for-money of domestic and international shipments, including through improvements to infrastructure and customs processes and investment in innovation and skills. But a collective effort is required, with the government collaborating closely with businesses, to ensure that the country’s logistics sector can operate optimally, thereby bolstering overall economic growth and global competitiveness.

Anubhav Mohanty, Associate Director at Oxford Economics
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