Effect of Tourism on the United Kingdom's Economy

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Tourism is one of the largest and fastest growing industries in the United Kingdom. According to official reports, the growth rate of the UK tourism was 4.1% in 2011 while the country’s economy growth rate was merely 0.7% in the same year. Statistics also show that between 2010 and 2012, tourism supported 1/3 of the new employment opportunities in the country. British Tourist Authorityforecasted that by 2025, with a growth rate faster than the nation’s economy, this industry is predicted to worth£257 billion, which shares around 10% of the country’s total GDP and significantly supports the nation’s employment. Both overseas tourism and sub-national tourism affect the nation’s economy.
This paper will discuss economic effects of tourism on the UK from six aspects–macro economy, employment, enterprises, investment, consumer spending and agriculture. They are then followed by a special analysis on the impact of 2012 London Olympic Games on the economy.

Effects of tourism on UK’s economy
1. Macro economy (contribution to GDP)
A report issued by the World Travel & Tourism Council (WTTC) in 2013 divides the total contributionof travel and tourism to GDP into three categories. The first category, accounting for 2.4 percent of 2012 GDP, is called direct contribution, defined as spending of tourists, such as spending on services of restaurants, hotels and travel agencies.The second category is indirect contribution, including investment in the travel industry and spending of service providers. For example, construction of facilities in a resort area and products and services acquired by a restaurant or a hotel in order to offer to tourists both fall intothis category. There’s also inducedcontributionmade to UK’s economy,displ...

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