UK Export Finance: analysis of supported jobs 2020-21
UKEF provided a record level of financial support to UK exporters in 2020/21 – Â£ 12.3 billion in new loans, insurance and guarantees. Our analysis shows that:
- Our financial support in turn supported Â£ 11.3 billion of UK economic output (including amounts subsequently reinsured by other export credit agencies and private insurers)
- This has consequently supported up to 107,000 full-time equivalents in the UK (AND P) works.
- Of the 107,000 jobs supported in 2020-2021, 58,000 were directly employed by exporters and 49,000 employed by their supply chain.
1. Modeling methodology supported by jobs
The methodology we use is based on the Input-Output analysis used by the Export-Import Bank of the United States and the Department for International Trade. We are using AND P effects, produced by the Office for National Statistics (ONS), who estimate how much AND P jobs are needed to produce Â£ 1million of output in each industry – that is, the ‘job intensity’ of production. we multiply AND P value effects of UK exports (matched by industry sector and adjusted for price inflation to align with recent AND P publication of effects) to estimate the number of AND P works UKEF supported. From the publication AND P effects and multipliers, we are also able to calculate both “direct” and “indirect” effects AND P effects, demonstrating the employment intensity of the industry we directly support and the employment intensity of the supply chain industries we support indirectly.
The breakdown by UKEF products and accounts given below is based on internal management information data for each company supported by UKEF. However, we note that our estimates of sustained employment do not directly relate to the value of guarantees, insurance and loans issued and effective. They also depend on the value of export contracts and the UK content of those contracts. In addition, the AND P the effect, or intensity of employment, can vary widely depending on the industry of the exporter.
We present the results for the two direct jobs (employed by the UK exporter supported by UKEF directly) and indirect jobs (jobs supported throughout the supply chain), as well as UKEFproducts and accounts of (business segments). Full definition of UKEFThe products and accounts of s can be found in the annual report and accounts.
It is important to note that we are not estimating the number of newly created jobs or jobs that would not have existed without UKEF. These estimates should be taken to relate to existing jobs in the UK (i.e. jobs supported by UKEF).
We focus on AND P jobs – which standardizes hours worked – to accommodate different work models. For example: a part-time employee working 20 hours per week can only count for 0.5 AND P, while full-time work is 40 hours.
3.1 Total AND P supported jobs
|Total AND P supported jobs||107,000|
|Of which Direct AND P works||58,000|
|Of which indirect AND P works||49,000|
3.2 Jobs supported by account
|Account 2 (guarantees and insurance)||29,000|
|Account 3 (guarantees and assurances issued on written instructions from ministers)||5,000|
|Account 5 (direct loan)||2,000|
|Account 6 (Temporary Covid Risk Framework)||71,000|
3.3 Jobs supported by the product
|Buyer credit guarantee||16,000|
|Support for bond working capital or exports||8,000|
|General working capital||76,000|
* Note: All estimates have been rounded to the nearest thousand jobs and numbers may not be added due to rounding.
3.4 Main conclusions
About two-thirds of jobs UKEF supported in 2020-21 have been linked to our Account 6 activity, subscribed and recognized as part of our Temporary Covid Risk Framework (TCRF). The TCRF was agreed with HM Treasury and established in April 2020 to support UK exporters through COVID-19.
General working capital, largely through our new Export Development Guarantee product, accounted for the majority of jobs supported.
4. Key assumptions
We adapt British economic production to the ONS‘ AND P effects by the industrial sector defined by the Standard Industrial Classification (CIS) codes. When an exporter has several CIS codes, we use the average AND P effects on all CIS codes.
The ONS‘latest estimates from AND P the effects refer to 2015. Therefore, we assume that the historical relationship between AND P jobs and production are maintained for 2020-2021.
Not all outputs are supported by UKEF will be exported – as with our new Export Development Guarantee – our estimates therefore relate to UK business economic output, not necessarily UK exports.
The value of UK economic output is based on estimates of UK content associated with contracts backed by UKEF.
Due to the nature of the guarantees which constitute the bulk of UKEF, we cannot estimate the value of British economic output spread over the actual “production period”. For example: a Â£ 100million construction or manufacturing export contract backed by UKEF in 2020-21 may take 3 years to complete. Our estimate of the jobs supported by this contract could in fact be spread over these 3 years, depending on when the contracted activity is carried out.
Our estimates reflect the maximum number of jobs supported by UKEFloans and guarantees from, because we do not know if all loans will be fully drawn (but at the same time, we cannot say that they will not be fully drawn).
Our methodology does not estimate what would have happened without UKEF support so that we cannot be sure that these AND P jobs would not have existed without, or were also “created”, due to UKEFfinancial support from.
The ONS‘estimates of AND P effects are derived from historical relationships and based on industry averages, which may not be representative for UKEF-supported businesses (for example due to differences in production labor intensity between exporting and non-exporting companies). This is also based on a static observation of the data – AND P the effects may change through exporting, as companies adapt their production methods to new markets.
The use of AND P in this analysis means that we cannot identify the number of people employed (actual jobs), because one of the AND P can represent a single person with several jobs, or a job distributed among several workers. As is inherent in the analysis of any large dataset, given data limitations and many assumptions, our results should be treated as indicative rather than precise estimates.