The economic contribution of UK rail
The UK railway sector supported £42.9 billion of economic production (GVA) in 2019, associated with 710,000 jobs. Productivity and wage levels, both on the railways and in the rail supply sector, were above-average in every region.
The UK railway sector supported £42.9 billion of economic production and was associated with 710,000 jobs and £14.1 billion in tax revenues in 2019, new research by Oxford Economics finds. The rail transport system—Network Rail and the train and metro system operators—accounted for £12.2 billion of that total Gross Value Added (GVA) measure of output. For every £1 of activity on the railway system itself, a further £2.50 of income was generated elsewhere in the UK economy, as a result of supply chain links and other knock-on effects. This extra GVA comprised £17.8 billion in the rail supply sector, £0.9 billion in on-station retail and its suppliers, and £12.0 billion across the wider consumer-facing economy due to wage-funded employee spending (the so-called ‘induced impact’).
The study, commissioned by the Railway Industry Association (RIA), also finds that both productivity and wages are higher than the economy-wide average, in both the rail transport system and rail supply sector. This is true not just for the UK as a whole, but for every one of its 12 constituent regions and countries.
Finally, the analysis looks at the potential impact of extra public spending on the UK rail infrastructure. Looking further into the future, if rail infrastructure spending were 50% higher than the ‘baseline’ expectation, an extra 104,000 rail supply sector jobs would be supported throughout the five-year period 2025-29. Even if these jobs simply displaced other work, the economy would still benefit, because of their high-productivity, high-wage nature.
In the more immediate future, the economy will still be recovering from the Covid pandemic, and will therefore have a degree of spare capacity. This means that any extra jobs created by an uplift in rail infrastructure investment could be genuinely additional, rather than displacing other employment. And this work could support more new jobs in turn, through induced effects. Here, we find that every extra £100 million per annum of spending on rail infrastructure would support an additional 1,400 well-paid jobs in the rail supply sector, plus a further 700 jobs across the wider consumer-facing economy.
Our economic consulting team are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques. Lead consultants on this project were: