May 16, 2022

Soknacki2014

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UK Export Finance: jobs supported analysis 2020-21

UKEF provided a record level of financial support to UK exporters in 2020/21 – £12.3 billion of new loans, insurance and guarantees. Our analysis shows that:

  • Our financial support in turn backed £11.3 billion of UK economic output (including amounts subsequently reinsured by other export credit agencies and private insurers)
  • This consequently supported up to 107,000 UK Full-Time Equivalent (FTE) jobs.
  • Of the total 107,000 jobs supported in 2020-21, 58,000 were directly employed by exporters and 49,000 employed by their supply chain.

1. Jobs supported modelling methodology

The methodology we use is based on Input-Output analysis used by the Export-Import Bank of the United States and the Department for International Trade. We use FTE effects, produced by the Office for National Statistics (ONS), which estimate how many FTE jobs are required to produce £1 million of output in each industry – ie the “jobs intensity” of production. We multiply FTE effects by the value of UK exports (matched by industry sector, and adjusted for price inflation to align to the latest FTE effects publication) to estimate the number of FTE jobs UKEF has supported. From the published FTE effects and multipliers, we are also able to calculate both the ‘direct’ and ‘indirect’ FTE effects, demonstrating the jobs intensity of the industry we are directly supporting and the jobs intensity of those industries in the supply chain we are indirectly supporting.

The breakdown by UKEF products and accounts given below is based on internal management information data for each business supported by UKEF. However, we note that our estimates of jobs supported do not relate directly to the value of guarantees, insurance and lending issued and effective. They also depend on the value of the export contracts and the UK content of those contracts. In addition, the FTE effect, or job intensity, can vary highly depending on the industry of the exporter.

2. Definitions

We present results for both direct jobs (employed by the UK exporter supported by UKEF directly) and indirect jobs (jobs supported throughout the supply chain), as well as UKEF’s products and accounts (business segments). Full definition of UKEF’s products and accounts 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 considered as relating to existing UK jobs (ie jobs supported by UKEF).

We focus on FTE jobs – which standardises hours worked – to account for different work patterns. For example: a part-time employee working 20 hours a week may only count as 0.5 FTE, whereas full-time work consists of 40 hours.

3. Results

3.1 Total FTE jobs supported

2020-2021
Total FTE jobs supported 107,000
Of which Direct FTE jobs 58,000
Of which Indirect FTE jobs 49,000

3.2 Jobs supported by account

2020-2021
Account 2 (guarantees and insurance) 29,000
Account 3 (guarantees and insurance issued on written instructions of ministers) 5,000
Account 5 (direct lending) 2,000
Account 6 (Temporary Covid Risk Framework) 71,000

3.3 Jobs supported by product

2020-2021
Buyer credit guarantee 16,000
Insurance 1,000
Bond or export working capital support 8,000
Direct loan 7,000
General working capital 76,000

*Note: all estimates have been rounded to the nearest 1,000 jobs and figures may not sum due to rounding.

3.4 Key findings

Around two-thirds of the jobs UKEF supported in 2020-21 were backed by our Account 6 business, underwritten and booked under 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 match UK economic output to the ONSFTE effects by the industry sector defined by Standard Industrial Classification (SIC) codes. Where an exporter has multiple SIC codes, we use the average FTE effects across all relevant SIC codes.

The ONS’ latest estimates of FTE effects relate to 2015. Therefore, we assume that the historical relationship between FTE jobs and output hold for 2020-21.

Not all of the output supported by UKEF will be exported – as for our new Export Development Guarantee product – so our estimates relate to UK firms’ economic output, not necessarily UK exports.

The value of UK economic output is based on estimates of UK content associated with the contracts supported by UKEF.

Due to the nature of the guarantees that make up the bulk of UKEF’s business, we cannot estimate the value of UK economic output spread over the true “production period”. For instance: a £100 million construction or manufacturing export contract supported by UKEF in 2020-21 may take 3 years to fulfil. Our estimate of jobs supported by this contract could in fact be spread over those 3 years, depending when the contracted activity is carried out.

Our estimates reflect the maximum number of jobs supported by UKEF’s loans and guarantees as 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).

5. Limitations

Our methodology does not estimate what would have happened without UKEF support so we cannot be certain that these FTE jobs would not have existed without, or likewise were “created”, due to UKEF’s financial support.

The ONS’ estimates of FTE effects are derived from historical relationships and based on industry averages, which may not be representative for UKEF-supported firms (for example due to differences in labour intensity of production between exporting and non-exporting firms). This is also based on a static observation of data – FTE effects could change as a result of exporting, as firms adapt their methods of production to new markets.

Use of FTE in this analysis means that we can’t identify the number of people employed (headcount jobs), as one FTE may represent a single person with multiple jobs, or one job spread among several workers.
As is inherent in the analysis of any large dataset, given data limitations and numerous assumptions, our results should be treated as indicative rather than being precise estimates.