UK luxury contributes $104 billion to United Kingdom economy, supports 450K jobs and accounts for 3.7pc of GDP: report

March 18, 2024

Bentley Motors was recently named Britain's most admired automotive manufacturer for the second consecutive year. Image: Bentley Motors

By Luxury Marketer Intelligence

The United Kingdom’s luxury sector is now contributing £81 billion ($104 billion) a year to the country’s economy and is helping the government raise $33 billion (£25.5) billion in tax receipts.

British luxury lobby Walpole’s “Luxury in the Making” study in association with Frontier Economics has found that the luxury sector’s economic contribution – equivalent to 3.7 percent of GDP – has grown 69 percent over the last five years to 2022. Companies operating within British luxury now support 454,000 jobs, directly and indirectly across a range of roles, from design and digital, to high-tech manufacturing and heritage crafts.

"We are delighted to publish our first study for five years, and the most comprehensive to date, demonstrating that the British luxury sector is valued at £81 billion and vital to the U.K. economy," said Helen Brocklebank, chief executive of Walpole, in a statement.

"We have quantified the significant high-quality employment offered by the sector throughout every region in the U.K. across hospitality, retail and manufacturing,” she said.

“The U.K. luxury industry deserves recognition and support to ensure our high-growth sector continues to flourish."

Walpole, based in London, represents some of the biggest U.K. luxury brands across sectors, speaking up for them within the country and overseas.

Helen Brocklebank

Policy wonky
The sector’s growth comes despite a challenging macro environment, including the U.K.’s departure from the European Union, the COVID-19 pandemic, supply chain issues and rising energy costs.

However, Walpole’s advice to the policymakers is that without tax reform and changes to intellectual property laws, the sector’s meteoric growth could stall.

Walpole forecasts that, by 2028, British luxury could be contributing £125 billion a year to the economy.

In other words, the sector luxury sector would be generating more revenue than the life sciences and construction industries, which are currently worth £97 billion a year and £110 billion a year, respectively.

A key part of Walpole’s report is an examination of the jobs and careers that the luxury sector provides, how the industry benefits the people it employs and its impact on the broader U.K. economy, cutting across sub-sectors including whisky, sparkling wine, automotive, hospitality and fashion.

For example, the luxury sector’s contribution to the government’s coffers is enough to fund the development of 51 midsized hospitals or train 373,134 nurses.

Also, the U.K. luxury sector’s total exports are £56 billion, up 45 percent in five years.

Despite a strong outlook, threats remain to the sector’s long-term prosperity and the value it can deliver for the country.

The Luxury in the Making report has identified areas where changes to government policy would set the luxury industry on a trajectory to deliver further growth in good quality, rewarding employment, while driving economic growth and protecting the U.K.’s world-class industrial crafts and the communities they serve.

Origin story
Among the calls are for changes to be made to the U.K.’s Geographical Indicator (GI) regime. This set of intellectual property laws are granted to produce-based products that have a specific link to the place where they are made.

An example of a product protected by such laws is Scotch whisky.

While the current regime currently applies to food and drinks, Walpole is calling for laws to be extended to include non-produce-based craft products, such as Savile Row tailoring or Staffordshire pottery.

The report highlights the need to support heritage craft in the same way that food and drink products are currently supported and protected.

Such measures would also provide protection throughout the supply chains and the communities they support, especially in areas such as Stoke, where, without a change in approach, the region’s pottery skills are in danger of being lost.

Policymakers must also shape a tax and regulatory system that supports high-quality employment, per Walpole.

“This month’s Spring Budget was a missed opportunity to reintroduce VAT-free shopping for international visitors,” Walpole said.

“However, failure to introduce a new scheme would cause the U.K. to miss out on potential growth, tax receipts and employment opportunities.”

The Association of International Retail (AIR) estimates retailers will lose £1.5 billion per year to tax-free EU competitors, according to Walpole.

Reforms to the apprenticeship levy and more investment into teaching modern foreign languages are also being called for by Walpole and its members.

Automotive sector drives growth
The U.K.’s high-end automotive sector – which includes companies such as Aston Martin, Jaguar Land Rover, Rolls-Royce Motor Cars and Bentley Motors – was British luxury’s standout performer between 2017 and 2022.

Over the course of the last five years, the sector achieved revenue totaling £32.9 billion. This is more than double the amount of the second-best performer, food and drink, which reported turnover of £12.02 billion.

Automotive’s strong performance comes despite U.K.’s departure from the European Union. The sector has fared well in the face of supply chain issues, notably the semiconductor shortage which gripped global markets during the recent pandemic.

The publication of Luxury in the Making comes just a few weeks after Indian conglomerate Tata, Jaguar Land Rover’s parent company, committed to building Europe’s largest electric vehicle battery factory in Bridgewater, Somerset.

The £4 billion facility is expected to create 4,000 jobs and be operational from 2026.

"British luxury has shown incredible resilience and strength over the past unprecedented few years," said Michael Ward, chairman of Walpole and managing director of Harrods, in a statement.

"Since our last report, published in 2019, the sector has faced many challenges – namely the effects of COVID-19 lockdowns across the world, establishing new trading relationships with the EU, greater fragmentation in global trade, and the scrapping of the VAT Retail Export Scheme,” he said.

"Despite this, I am immensely proud Walpole, with this comprehensive report, has demonstrated how critical the U.K.’s luxury sector is to our economic and cultural life and, more than that, that is one of the most vibrant and high-growth industries of the future.”

Please click or tap here to download Walpole’s “Luxury in the Making” report in association with Frontier Economics

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UK luxury contributes $104 billion to United Kingdom economy, supports 450K jobs and accounts for 3.7pc of GDP: report

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