Aerospace is the UK’s second fastest growing export sector

In this latest series of blogs, we take a deep dive into some of the UK’s most important sectors using our UK trade briefing report.  Here we look at the UK’s second fastest growing export sector, aerospace.

This report was prepared in collaboration with Global Trade Review (GTR) and it reveals that aerospace exports are expected to grow at 3.7% a year to 2021.  This is slower than food and beverage exports but faster than the precious metals, automotive and pharmaceuticals sectors respectively (see figure one).

The data shows that aerospace exports were worth $21.5bn in 2017 and the projected growth could generate an extra $796m a year for the industry’s exports.  

Figure one: the UK’s fastest growing export sectors

Rank (fastest growing)

Sector

Growth rate a year to 2021 (%)

Value in 2017 (US$)

Project growth per year (value US$)

1

Food and beverage

6.3%

$27.2bn

$1.7bn

2

Aerospace

3.7%

$21.5bn

$796m

3

Precious metals

2.3%

$34.3bn

$789m

4

Automotive

1.7%

$54.7bn

$930m

5

Pharmaceuticals

0.8%

$32.9bn

$263m

Total

 

 

$170.6bn

$4.5bn

 

Meanwhile, exports of the five fastest growing sectors were worth US$170.6bn last year. The projected growth means that these sectors could generate an extra US$4.5bn a year for UK exports to 2021. 

Flying high

The research shows that the UK aerospace industry is important to the UK economy and is already the UK’s eighth largest export sector.  What’s more, the UK is the fourth largest aerospace exporter globally after the US, France and Germany where exports are worth $136bn, $74bn and $47bn respectively.

UK aerospace imports were worth $20.1bn in 2017, giving the UK a moderate trade surplus of $1.4bn in this sector. 

Looking at the sector in more detail, while the UK exports more large aircraft and more helicopters than it imports, the UK imports nearly twice the number of aircraft parts than its exports. 

In particular the UK imports significantly more aircraft engines and radar, radio navigational aid and radio remote control apparatus than it exports.   

Looking ahead

The research shows that the sector’s performance in future is closely tied to global geopolitical developments.  With the growing pressure to increase defence spending, demand for aerospace products is likely to grow.

In addition, with the uptick of the global economy, civilian air travel is also likely to grow.  This will increase demand across the civilian aviation sector.

Looking at the size of companies in the sector, the data shows that some 52% of businesses in the sector are SMEs.  What’s more, these businesses contribute 30% of sector turnover, making them a vital part of the industry.

Smaller, more innovative companies – especially in manufacturing – play a crucial part in the UK’s foothold in global supply chains, as these aerospace businesses demonstrate.

But in order for this sector and the SMEs within it to continue to succeed, they need working capital. 

It is only by providing better access to funding that we can support businesses to trade, grow and create jobs.

To read more about the research, please see our UK trade briefing report: https://www.wyelandsbank.co.uk/uk-trade-briefing-2018/   

 

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This research was initially published in our UK trade briefing 2018 report, on which this blog and the data within is based.  The sources for the research include the United Nations, Eurostat, the OECD and customs and excise data as well as UK Office of National Statistics data. The analysis is based on the trends and patterns in trade flows which it projects forward.  It does not account for potential political or policy changes.

The information in this article is not the opinion of Wyelands Bank but based on the research commissioned and data provided by Global Trade Review in March 2018

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