Tourism Socio-Economic Impact in the UK

Abstract

Tourism is a multi-disciplinary subject with many separate aspects. It affects countries both positively and negatively. In most cases, tourism is a driving force in the economic growth of nations. This report gives an in-depth analysis of socio-economic impacts of tourism in the UK. This report further explores tourism relative to other sectors of the economy. Finally, the report explains both positive and negative impact of tourism in the UK.

Introduction

Tourism is one of the fast growing and most dynamic sectors in many countries and especially in the UK. It contributes both positively and negatively to the economic and social development of a country. Tourism generates multiple economic and social benefits to the receiving country. The main reason why countries promote tourism is the expected economic benefits that accrue from foreign income and job creation. Tourism involves multifaceted activities that generate economic benefits.

Some people regard tourism as an industry, while other perceives it as an activity. Therefore, the term ‘tourism’ underscores diverse meanings to different people. In fact, Akkemik (2012) supports this notion by postulating that tourism cannot be precisely defined, but it can only be termed as a problematic line of activity between shoppers and tourists.

Although tourism has huge economic benefits in the UK, there is perceived fear that is associated with mass tourism coupled with poor management. Extensive tourism can create a platform for the emergence of social vices such as crapulence and noise pollution among others. Therefore, the UK must minimise these negative impacts by measuring economic benefit against negative outcomes that come along with tourism.

Social impacts of tourism

Tourism has evolved quickly to be amongst the largest commodities in international trade. Consequently, tourism brings significant change in both the government and private sectors. In order to encourage economic benefits of tourism, governments undertake aggressive policies to promote the practice. In some cases, some governments even assign tourism as their top priority in the development agenda.

Farsani, Coelho, and Costa (2011) posit that government policies concentrate mostly on commercial support strategy. In some instances, the governments have an overestimated support of tourism. Consequently, the governments over prioritise tourism at the expense of other investments. For example, the resources that are supposed to go to other sectors like education and health among others are diverted to the tourism industry.

Population

Tourism involves different people with disparate cultural backgrounds travelling to the UK. Policymakers and scholars alike are worried that in the future, some tourist attraction sites may lose their cultural uniqueness. For instance, in Scotland, researchers have established that tourism destinations have compromised the nearby population’s social identity.

Some tourists end up settling within these communities instead of going back to their home country. Furthermore, tourism destinations encourage the development of new infrastructures including airports, resorts, marinas, and golf courses. These facilities need employees who in most cases relocate near the tourist destinations. As a result, population increases rapidly in those areas.

Tourism development affects local communities in various ways including cultural mix, education, and job creation. Extensive tourism can encourage crime. Tourists become an easy target for criminal gangs and this phenomenon has been witnessed all over the world. In order to combat this crime, the UK government must encourage organised education, moral competitive market, qualified tourism professional and standardised management. Crime against tourists encourages bad publicity, which creates a negative image in potential tourist attraction areas.

Economic impact of tourism

Tourism has a direct impact on the UK economy and it has continued to deliver a significant increase in the GDP. For example, the tourism industry currently delivers £58 billion in GVA, which can be interpreted as 4.1 per cent of overall GDP. According to a new research by an Oxford economist, the tourism sector’s direct contribution to the UK GDP is almost five times the GDP of the mining and manufacturing sectors (Jackson & Wenyu, 2015). In 2011, the total tourism revenue amounted to £101 billion or equivalent to 6.7 per cent in gross domestic product (Jackson & Wenyu, 2015).

Moreover, the research noted that tourism contribution to the overall GDP is increasing significantly as opposed to other sectors. The tourism industry is expected to grow at the rate of 4.1 per cent in the next ten years, which is faster than the total growth in the economy (Jackson & Wenyu, 2015). It is estimated that the tourism sector will be more than £257 billion by 2025 and it shall support 3.8 million jobs (Jackson & Wenyu, 2015). These jobs account for around 11 per cent of the UK population.

Creation of jobs

Tourism creates new job opportunities each year and the job openings are expected to increase in the next ten years. According to research, the tourism industry supports more than 3.1 million jobs, which is 9.6% of all job in the UK (Goulding, Horan & Tozzi, 2014). It is estimated that for every 1 per cent increase in spending in the UK tourism, full-time employment is expected to increase by 0.89 per cent (Goulding, Horan & Tozzi, 2014). Direct employment occurs mostly in the transport operations, hotels, tour guides, and travel agencies. It also contributes indirectly through other sectors such as construction, banking, and transportation companies.

Infrastructure development

Tourism encourages the development of infrastructure around the destination areas. These facilities include roads, resorts, airports, and railways. As a result, local communities can enjoy facilities provided to tourists such as water and power supply. Cárdenas-García, Sánchez-Rivero, and Pulido-Fernández (2013) argue that the European member states such as Britain can apply for help from the European Regional Development Fund to improve infrastructure in order to promote tourism.

The multiplier effect

The tourism industry creates both direct and indirect effects on the economy. The overall injection into the economy has a great impact on the economy either directly or indirectly. This assertion holds because direct beneficiaries of tourism (local businesses and local workers) re-spend much of their income in the same economy. In fact, the large past of the earned income is spent locally. This cycle creates more jobs in the UK and it is estimated to support further 1400 jobs in Centre Parcs alone (Goulding, Horan & Tozzi, 2014).

Seetanah (2011) argues that the link between direct and indirect supply chain in the economy is known as the multiplier effect. It measures the direct and wider impact of capital injection in the economy relative to the direct effect. According to Goulding, Horan, and Tozzi (2014), it is estimated that an additional £ 1 GVA generated in the UK due to direct tourism will add an estimated £1.2 in the supply chain. The £ 1 increment in the GVA is expected to multiply and generate an additional £ 1.8 in the UK due to consumer spending and supply chain effects (Goulding, Horan & Tozzi, 2014).

Discussion

The UK is a developed nation with fantastic tourist attraction sites such as the World Heritage sites and impressive landscape. In addition, it has attractive historic characteristics and culture. According to a survey by Vianna, Meekan, Pannell, Marsh, and Meeuwig (2012), visiting the UK heritage is not only attractive to locals, but also the preference for international tourists. These facilities include Tate Modern, the Natural History Museum, and the British Museum. According to a report by Walker (2013), the UK is the eighth world’s biggest tourist destination, which contributes to an estimated 6 per cent of the GDP in the country.

The UK tourism industry has both positive and negative impacts on the economy. For example, the tourism sector provides employment opportunities in the restaurant, entertainment, and transportation industry. It offers significant jobs both skilled and semi-skilled in the servicing sector. Thus, tourism provides an impressive percentage of overall jobs in the economy.

Tourism also generates government revenue through taxes. Tribe (2011) posits that the two prominent sources of government revenue from tourism are value added tax (VAT) and Airport taxes. In 2013, Airport taxes amounted to £1028 billion, which represent a significant source of government revenue (Goulding, Horan & Tozzi, 2014). Moreover, tourists pay VAT as they pay for rooms and breakfast, which accounts for 20% of total cost. Tourism also contributes to foreign exchange earnings.

Profit from foreign currency earning comes from selling goods and services in the global marketplace. For example, banks are the most prominent beneficially of foreign exchange earnings through currency exchange into pounds. Since the demand of the sterling pound is high, it signifies that the UK tourism sector is booming. Tourism also leads to the multiplier effect whereby income injected into the economy is re-multiplied due to the local consumer spending effect and value chain.

However, if direct beneficiaries opt to spend this income outside the UK, it leads to leakage. Therefore, although tourism is beneficial to the economy, it has some negative effects. For example, tourism leads to seasonal unemployment. Pegg, Patterson & Gariddo (2012) posit that tourism is a seasonal industry, which is highly dependent on holidays and climatic changes. During summer holidays and especially in August, tourism is at its peak; however, it goes low as wet weather sets in. The demand for seasonal workers varies according to season and after the peak season is over, employers terminate most of the seasonal workers. This aspect makes jobs in this sector insecure thereby affecting employment.

Conclusion

The positive impacts of tourism in the UK economy outweigh the negative effects. Tourism has encouraged government spending to improve living standard of both skilled and unskilled workers through improved infrastructure. It has created significant jobs within the economy, which in turn has improved the living standard of the UK citizens. This sector has improved the UK’s GDP significantly in the last five years and it is expected to continue in the future. This aspect raises hope of future expansion and increase in government revenue. The possibility of the UK tourism industry improvement in the next ten years exists if government policies can be improved to favour international tourists.

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