Research and analysis

UK Export Finance: jobs supported analysis

Published 20 June 2019

Produced by UK Export Finance (UKEF), this analysis provides an estimate of the jobs supported by UKEF-backed exports.

In the 2018 to 2019 financial year, UKEF supported around £6.5 billion of UK exports through insurance guarantees and loans (including amounts subsequently reinsured by other export credit agencies and private insurers). These exports have supported an estimated 47,000 UK full time equivalent (FTE) jobs.

1. Definition

UKEF’s jobs supported estimate shows the number of FTE jobs in the UK associated with UKEF-supported exports of goods and services. This is not an estimate of the number of newly created jobs or jobs that would not have existed without UKEF support.

2. Methodology

The estimate – independently reviewed by the UK Trade Policy Observatory – is based on the methodology used by the Export-Import Bank of the United States. The methodology uses the latest estimates of FTE effects (reference year 2015) produced by the Office for National Statistics (ONS) to calculate the number of FTE jobs associated with UKEF-supported exports of goods and services.^{[footnote 1]} FTE effects measures how many FTE jobs are required (directly and indirectly) to produce £1 million of output in each industry. By applying the FTE effects to estimates of UK exports supported by UKEF (adjusted for output price inflation to align with FTE effects estimates for 2015), we have derived the number of FTE jobs supported.

3. Assumptions

Key assumptions include matching UKEF’s in-house sector classifications to the standard SIC 2007 industry codes used by the ONS (using average FTE effects where multiple SIC codes match to a single UKEF industry sector) and estimating the value of UK exports supported by UKEF using in-house estimates of UK content and contract values for short-term and medium/long-term business.

4. Limitations

The ONS’s estimates of FTE effects are derived from historical relationships and based on the average for the entire industry which may not be representative for UKEF supported firms (for example due to differences in labour productivity between exporting and non-exporting firms).^{[footnote 2]} Use of FTE means that the analysis cannot indicate the number of people employed, as one FTE may represent single person with multiple jobs or one job spread among several workers. The methodology also does not estimate what would have happened without UKEF support, so we cannot conclude that these FTE jobs would not have existed otherwise.

As is inherent in the analysis of any large dataset, given the various data limitations and the numerous assumptions in the modelling, our results should be treated as indicative rather than being precise estimates.

5. Alternative methodologies

The advantage of this jobs supported methodology is that it is based on well-understood and established input-output analysis produced by the ONS which captures FTE jobs supported directly and indirectly by measuring UK specific exports supported by UKEF. The data requirements are not onerous and methodology is easy to compute.

On the other hand, disadvantages of the methodology – for example lack of counterfactual and use of industry averages – could be addressed by assessing the performance of individual firms that received UKEF support compared to those that did not receive support. However, this type of analysis is likely to be more resource intensive and to require specialist data and skills.

6. Model results

	2014-15	2015-16	2016-17	2017-18	2018-19	Total
Short-term UK exports supported (£m)	966	402	466	207	1,250	3,290
Medium-term UK exports supported (£m)	979	817	1,648	1,038	5,426	9,907
UK jobs supported (FTE jobs)	24,000	14,000	14,000	16,000	47,000	114,000

1. ONS, Type I UK employment multipliers and effects, reference year 2015, March 2019 ↩

2. ONS, UK trade in goods and productivity: new findings, July 2018 ↩