Science, tech and healthcare set to power the UK’s post-Brexit economic growth
- New report identifies the UK’s most important long-term growth industries
- Scientific, admin, professional and support services sector is set to more than double in size over the next 20 years
- Transport and Communications sector to create 120 new jobs a day until 2038, with tech and environmental changes a major driver
- Health and social care also set to grow to meet the demands of an ageing population
The UK’s ten most important post-Brexit industries have been identified in an analysis commissioned by BNP Paribas, with science, technology and healthcare playing vital roles in driving future economic growth.
The BNP Paribas Market Leaders report analyses the fastest growing sectors in the UK economy over the next two decades and the underlying drivers of growth. It is forecast using two metrics: Gross Value Added (GVA) and employment levels. The 16 sectors analysed are those defined by the Office of National Statistics (ONS) for use in national economic indicators.
Against the backdrop of a post-Brexit environment, the report – carried out by Cebr – forecasts strong economic performance in science and technology. The scientific, admin, professional and support services sector is set to more than double in size (by 103%) over the next 20 years and see 25% employment growth over the same period, meaning it will be the biggest sector in the UK economy by 2038, worth £560bn.
The second fastest economic growth over the next two decades will come in the transport, storage and communications sector, which is home to the IT and computer programming industries. The sector overall expects to see 92% growth in the coming 20 years, and will be worth £451bn by 2038 – making it the second largest in the UK economy. The analysis suggests that the sector will see a 37% increase in employment and add 900,000 jobs in the next 20 years – or 120 every day.
The report identifies that the IT and computer programming sub-sector is likely to see a notable rise in its value (increasing by 8% year on year to 2024, then by 6% in the longer term). Seven in ten (71%) executives in the computer programming and consulting industries say tackling increased cyber security fears – from both businesses and consumers – will drive significant growth in the industry, through increasing demand for sophisticated antivirus software and specialist consulting services.
The third ranked sector is health and social work, which will see a 78% increase in the value of output over the next 20 years, as the UK meets the demands of an ageing population with increasingly complex needs. The sector is forecast to grow to a value of £258bn in 2038, which will make it the fifth largest sector in the UK. However, it is set to only see a 29% increase in employment. Driving this growth is the higher number of people who will require more time from doctors and nurses, as well as increased care home availability. This will require both greater NHS spending as well as private expenditure on many non-state funded health products.
The automotive manufacturing sector is also expected to stage a recovery post-Brexit. Following a challenging period where growth rates fell to -1.4% in 2018, economists predict that the industry will begin to prosper again over the next two years, achieving growth of 3% by 2021. 68% of survey respondents in the automotive sector responded that the demand for green vehicles would affect future growth positively.
Over the long term, the findings identify the impact of bigger societal and technological trends. Driving much of the growth is a commitment to sustainability and tackling environmental concerns. Indeed, the UK Government’s commitment to legislate for net zero emissions by 2050 will drive demand for innovation and creation of new products from the growing number of businesses and consumers seeking to become carbon neutral. Additionally, a net zero economy requires low carbon infrastructure and construction – for example, an increase in the use of electric vehicles requires further development of a smart grid and widespread construction of charging terminals. 60% of construction professionals indicated that green construction would be a positive indicator of growth.
It’s also unsurprising to see a big uplift in the IT sector. While growth in employment rates in this sector is offset somewhat by labour efficiencies coming from automation, we will continue to see specialist technology sectors booming over the next 20 years.
Drivers of Growth
The BNP Paribas Market Leaders Report also investigates the key drivers of growth in the UK economy and the regions set to benefit most from this economic prosperity.
- Inner London ranks #1 when it comes to value in the Transport, Storage & Communications sector.
- North Yorkshire is one of the top five areas for share of GVA coming from the Accommodation & Food Services sector (5.1%). This sector is set to see a 41% increase in value over the next 20 years.
- North Wales will enjoy employment growth thanks to a number of high-growth fintech start-ups locating in the area.
- North Eastern Scotland, including the cities of Aberdeen and Dundee, sees 15% of its GVA value come from the high growth scientific and support services sector.
- Manchester is identified as a new powerhouse in the health and social work sector with a market value of £6bn, equivalent to 9% of the city’s economy.
- Cornwall and Isles of Scilly will see significant growth from the real estate sector (currently 17% of its economy) with the GVA of the sector set to grow by 44% over the next two decades.
Additionally, the report identifies an elite cohort of ‘Market Leaders’, Britain’s highest growth businesses, contrasted with lower growth ‘followers’. The characteristics of these businesses include:
- Employee satisfaction: market leaders are more likely to deploy productivity improving measures to ensure progression, including regular promotion opportunities (33%), flexible working (37%) and offering training courses (52%).
- These companies also exhibit a stronger risk appetite, with a third (32%) embracing risk versus a much lower number (8%) of ‘followers’.
Anne Marie Verstraeten, UK Country Head, BNP Paribas Group, said:
“Over the next 20 years, the environment and technology will increasingly be the catalysts of change for all sectors of the UK economy. Such change inevitably breeds challenge, but it also triggers real opportunities for UK PLC to put its leadership position and creativity in these two areas to work, and, in so doing, create sustainable growth and new jobs.”
Download the report here.