Non-financial businesses worth £1 trillion to UK economy

Non-financial businesses’ contribution to the economy hit £1 trillion last year, with the service sector contributing 54.7 per cent of that figure.

The UK’s recovery is well underway and businesses are continuing to generate more and more wealth for the nation.

In fact, according to the latest figures from the Office for National Statistics (ONS), the non-financial business economy made a contribution to the UK economy worth a monumental £1 trillion, in terms of approximate Gross Value Added at basic prices (aGVA).

That represents the income they generated altogether after the costs of their own goods and services had been deducted – which also implies that profits are healthy across the business landscape.

It comes on the back of an annual growth rate of 8.1 per cent in aGVA – the highest since 1997 – which indicates just how impressive the performance of British businesses has become. In fact, that actually places aGVA as high as 11.3 per cent above the 2008 figure, meaning that firms are well and truly shaking off the impact of the financial crisis.

The service sector contributed the most, accounting for 54.7 per cent followed by production – which encompasses manufacturing – with just over a fifth of the total.

Every sector of the non-financial business economy reported an improvement, ONS says, the first time this has happened since the recession took hold. Overall, the non-financial service sector was the biggest net contributor: with a 9.7 per cent annual increase in aGVA in 2013, it is now contributing 25 per cent more than it was in 2008.

That may not be surprising, given that the UK’s service sector is huge and continues to grow. However, other areas of the economy are picking up too – in line with a better manufacturing outlook, production aGVA rose above 2008 levels for the first time. That trend may well be set to continue in the coming months if manufacturing prospects continue to improve.

Meanwhile, one of the most encouraging figures is that improvement recorded in the construction sector, which was among those hardest hit by the financial crisis.

ssIn fact, 7.9 per cent of the total aGVA in the non-financial business economy comes from construction, and in 2013 it contributed 10.7 per cent more than it had the previous year. Though that remains below 2008 levels, it still marks a move in the right direction, showing that UK businesses are going from strength to strength.