Every £1 of economic activity directly generated by the logistics sector more than doubles its value, to provide a further £1.04 across the wider economy, according to new research from business group Logistics UK. The report, produced in association with Capital Economics, also indicates that a 1% increase in logistics’ share of the economy could attract £30 billion of foreign investment into the UK – equivalent to more than £1,000 per household. According to the new research, the logistics sector underpins £356 billion of economic activity, 5.3 million jobs and £65 billion in tax revenues across the UK, as well as enabling more than £1 trillion of international trade every year.
The findings are part of the report's research which examines the indirect, induced and catalytic impact of the logistics sector on the UK economy. The modelling, from independent macroeconomists Capital Economics, launched today (27 October) at the Houses of Parliament on the eve of the Budget, shows that the sector’s economic impact extends well beyond its £175 billion direct annual contribution1, and that logistics businesses and workers contribute an additional £181 billion to the economy each year through their own personal spending activity.
Ben Fletcher, CEO of Logistics UK said:
“With the Budget imminent, my message to the Chancellor is that the logistics sector doubles your money, with every £1 of economic activity generated by our sector delivering a further £1.04 through its supply chain and employee spending.
“When considered alongside the sector’s direct financial contribution, significant tax contributions and role as a major employer, it is clear that logistics is not simply a critical sector in its own right, but an enabler of prosperity across the whole economy. These findings demonstrate why supporting the conditions for logistics businesses to invest, grow and operate efficiently should be a top priority for the government as it seeks to boost growth in every postcode.”
As revealed in detail in the report UK logistics: a critical driver of growth and investment the spending by logistics businesses with their UK suppliers supported over £90 billion of GVA across the economy and 1.5 million jobs in 2024. Five sectors (transport, administrative services, professional services, finance and manufacturing) experienced GVA boosts of over £10 billion each due to this activity by logistics businesses. The analysis also outlines how logistics sector employees generate economic activity from their personal spending with UK businesses: this “induced” activity contributed an additional £90 billion in GVA in 2024 and supported 1.1 million jobs.
Capital Economics’ research found that the logistics sector contributes £30 billion pa in tax revenue, and that the Exchequer receives a further £34 billion due to spending by logistics businesses and workers.
The research by Capital Economics also identifies a significant investment dividend from a strong logistics sector. Alongside economic boosts from GVA, tax revenue and job creation, the new analysis quantifies the well-documented link between a thriving logistics sector and foreign direct investment (FDI), a key driver of productivity, innovation and economic growth. The modelling suggests a one percentage point increase in logistics GVA is associated with a one percentage point increase in FDI, which is equivalent to a £30 billion boost to the economy, or more than £1,000 for every UK household.
“International companies invest in countries where goods move efficiently,” continues Fletcher. “Reliable supply chains with good transport networks, warehousing capacity, ports and airports all reduce costs, increase profits and expand market access, and investors know that. To get growth going, we must ensure the logistics sector has the capacity, resilience and infrastructure needed to drive growth and attract investment from home and abroad.”
The report UK logistics: a critical driver of growth and investment can be downloaded here: https://logistics.org.uk/reports/uk-logistics-a-critical-driver-of-growth-and-investment/