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New report shows standards contributed towards GDP growth
Published:  30 June, 2015

BSI, the business standards company has published independent research from the Centre for Economics and Business Research (Cebr) demonstrating the economic benefits of standards to the UK and to individual UK businesses. The new report shows standards contributed towards £8.2 billion* of GDP growth

The research which is an update to a Department for Trade and Industry (DTI) 2005 study - shows that standards continue to play a crucial role in the UK economy.

The study incorporated an econometric analysis measuring the contribution of standards to UK labour productivity between 1921 and 2013 and a comprehensive survey of 527 companies in seven key sectors2 as well as interviews and case studies with businesses.

The report found that standards contribute towards 28.4% of annual GDP growth and 37.4% of annual productivity growth in the UK1. Findings show that standards contribute towards over a third (37.4%) of annual UK labour productivity growth, translating into 28.4% of annual GDP growth – consistent with findings from similar national level studies for France and Germany.

The study also highlights that the most productive UK sectors are the most intensive users of standards, with aerospace and defence showing a productivity increase of 20.1% between 2005 and 2014 compared to 4.9% for the economy as a whole.

Through enhanced reputation and confidence in the quality of products and services, standards open up market access for businesses. Analysis of the survey findings found that standards drive export performance as evidenced by an annual exports rise of 3.2% across sectors, with close to 10% in the food & drink manufacturing sector alone. This role in supporting international trade is valued at up to £6.1 billion for the UK economy3. By providing transparent and transferable knowledge, and improving compatibility and interoperability, standards are shown to be a catalyst for innovation.

The survey of 527 decision makers in businesses across the UK revealed:

1. 70% said standards enhance the quality of products, by improving their supply chain activity, including improved quality of supplier products and services;

2. 89% said standards has optimized their compliance with regulation;

3. 84% said using standards has enhanced their reputation;

4. 54% said technical information is now more accessible through standards;

5. Mid to large businesses said standards are enabling them to diversify into new markets in the UK and abroad;

6. SMEs said they are benefitting from increased productivity, better innovation and an expanding customer base;

Scott Steedman, director of standards at BSI said: “It is very clear to see that standards are a key driving force in increasing productivity, enhancing export potential and raising the UK’s GDP. These are not simply bold statements but are backed up by independent research which has examined the habits of businesses of different sizes and sectors across the UK. The UK is a world leader in shaping best practice standards for business and industry that differentiate high performers from the rest of the market. The evidence shows that even in this tough economic climate, businesses who are willing to continually improve their processes, develop their people, and seek to provide assurance for their products and services, can and will grow – not just in terms of market share but also in reputation and trust.”

Vicky Pryce, the chief economic adviser at Cebr said: “Standards play a vital and often invisible role in supporting economic growth and open up the channels for boosting productivity and innovation. They are an underused tool giving businesses that aspire to a higher level, the opportunity to work together to share innovation. The benefits to companies are multiple and range from enhanced quality of products and the efficiency of processes, to the effective functioning of supply chains. The UK has played a leading role globally at each stage of the standards evolution process and this report calls for the continued capitalisation of its strong position as a world leader, in the industries where we have competitive advantage.”

Notes

* This refers to the amount of GDP growth in £ terms that standards contributed towards in 2013, measured in 2014 prices.

1 It is important to emphasise that this finding does not imply that standards are exclusively responsible for boosting productivity growth. Instead standards have a symbiotic and complementary role in driving productivity along with other factors such as improvements to education and advancements in technology. Standards support productivity growth through a variety of mechanisms such as by enhancing organisational efficiency, boosting trade and facilitating innovation.

2 The survey was carried out by JRA Research. Total sample size was 527 decision makers at companies from seven sectors - automotive, energy, aerospace and defence, food and drink manufacturing, ICT, construction, and life sciences. Sectors were chosen because they represent some of the most standard intensive sectors in the UK economy. Fieldwork was undertaken during February and March 2015. The survey was carried out using telephone interviews (CATI).

3 Responses from the BSI Standards in Industry Survey were combined with official sector level revenue exports revenue and GVA data to estimate aggregate increases to revenue, GVA and exports at the sector level. The survey responses were adjusted to reflect the true UK population of businesses in each sector.