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What Are the Biggest Industries in the UK: Facts and Stats

Tips / 17.10.2024

The United Kingdom (UK) trades with many other European countries. This developed and industrialised economy was previously well-known for its established manufacturing and agriculture sectors.

However, changes in production industries, the introduction of new government schemes and technological advancements have resulted in significant growth in the service industry.

With a high purchasing power parity among the population and significant contributions to international trade, the UK is the sixth largest world economy.

If you would like to learn more about the biggest industries in the UK, this post covers the leading sectors in the region by revenue. Let’s take a closer look.

TABLE OF CONTENTS

What Are the Biggest Industries in the UK by Revenue?

The British government is responsible for regulating the multiple industries in the UK. While certain industries face government restrictions, others receive subsidies and government help to ensure they remain competitive and cater to increased demand.

While the immediate aftermath of Brexit led to many uncertainties in terms of how the UK would trade with other countries, there’s been a long period of heightened economic activity despite regulatory changes.

This is made evident by the fact that the total value of the country’s GDP reached $3.495 trillion. So, without further ado, let’s explore which industries have made the biggest impact, taking into account their size by revenue.

1. Supermarkets

The supermarkets and retail sector in the UK is largely defined by the “big four”, which are Tesco, Sainsbury’s, Asda and Morrisons.

However, the recent cost of living crisis with a 45-year high in consumer price led to household shopping constraints, with many households opting to buy food essentials and shopping around for discounts.

Despite this being the UK’s largest sector, it’s also expected to see revenue fall in the current year through to 2025, even with a small growth rate of 0.6%. Furthermore, there’s been an easing in pricing since May this year, which means a slight uptick in expenditure by households.

Revenue generation: $192.0 billion (2024)
Employment numbers: 1.15 million (2023)
Market share of largest operator: Tesco PLC at 27.7%(2021)
Growth rate: 0.6% (2024)
Average profit margins: Average operating margins in the sector fell from 3.2% to 1.8% (2022-2023)
Technological advancement: The supermarkets sector is seeing a massive rise in online deliveries, largely spurred on by stay-at-home orders during the Covid-19 lockdown.
Environmental impact: Tesco, Sainsbury’s, The Co-op, Marks & Spencer and Waitrose have committed to halving their emissions by 2030. However, they use a lot of energy to power refrigerators and lights, in addition to vast quantities of food waste and value chains.
Competitive landscape: High and rising
Government support and subsidies: None (2020)

2. Construction contractors

Some of the biggest players in the construction industry in the UK are Balfour Beatty, Barratt Developments and Kier Construction. They use their size to negotiate better value contracts.

However, apart from these three big players, there are many small players as well. Both focus either on new construction, renovations, maintenance or repair services.

The UK government is investing in infrastructure development programmes to assist with public housing and public buildings. In addition, the government’s aim to improve these buildings is aligned with its goal of decarbonisation.

Despite significant growth over the past few years, the first quarter of 2024 is seeing the construction contractors industry on a slight decline, partially due to material prices, labour shortages and an uncertain economic environment.

Revenue generation: $180.2 billion (2024)
Employment numbers: 2.69 million (2024)
Market share of repair and maintenance (R&M) sector: 41.20% (2024)
Growth rate: 2.1% (2024)
Average profit margins: 3.9% (2021)
Environmental impact: The UK Green Building Council estimates that approximately 10% of carbon dioxide emissions are “directly” related to construction activities. This rises to 45% when it comes to the entire built environment.
Competitive landscape: Highly competitive
Government support and subsidies: Government subsidies are available for hiring in the industry.

3. New car and light motor vehicle dealers

This industry is seeing continued decline since Covid-19, despite growth of 3.3% being expected over the current year. Consumers are mostly shying away from purchasing new vehicles and the rising cost of fuel is contributing to this.

On the other hand, there’s an increase in the purchase of electric or hybrid vehicles, which are fuelling new car sales. In addition, fleet sales to businesses with over 25 vehicles are on the rise, as well. Around 9,152 businesses operate in the industry.

Revenue generation: $146.6 billion (2024)
Employment numbers: The leading companies employ more than 182,000 people. The broader industry employed a further 780,000.
Export contribution: The sector exports approximately 80% of the vehicles it produces.
Market share: New car exports account for 10% of all UK trade
Growth rate: 1.18%
Average profit margins: 5%
Technological advancement: Hybrid and electric vehicle manufacturing is on the rise.
Environmental impact: High fuel costs and the environmental impact associated with these are an important consideration for the industry. This is one of the reasons why there is an uptick in purchases of electric vehicles.
Consumer demand: The UK new car market is experiencing growth in overall registrations, partly driven by fleet sales. However, consumer demand for private buyers faces substantial challenges.
Competitive landscape: High
Global competitiveness: The UK ranks ninth in the world for innovation. However, high energy and tax costs are affecting this position.
Government support and subsidies: Few tax incentives for investment.

4. Pension funding

In terms of the pension funds sector, there’s an increase in companies that are moving away from defined benefit (DB) to defined contribution (DC) pension schemes. The purpose of this move is to cut costs and minimise risk.

Ultimately, pension funds are aiming to generate optimal investment returns, while following strict regulations. Fierce competition defines the sector.

There are around 5,100 UK privately owned DB schemes in the UK, although there are also numerous public sector pension funding schemes as well. The volume of assets in DC pension schemes is expected to double to around £1 trillion over the next decade.

Revenue generation: $133.6 billion (2024
Growth rate: A compound annual growth rate (CAGR) of 4.22% from 2024 to 2029.
Average profit margins: 29.4%
Competitive landscape: High

5. Banks

The banking and financial services sector contributes a significant portion to the UK’s economy. However, stricter recent regulations have meant that lending has been restricted. Income derived from this sector has also been heavily affected by low interest rates.

Many banks and financial institutions have had to close numerous branches in an effort to remain competitive. There is a shift to online banking and online payments, driven by technological advances.

Revenue generation: $132.4 billion (2024)
Employment numbers: 612,519 (2023)
Market share: 9.0%
Growth rate: 9.9%
Profit margins: 57% – 80%
Technological advancement: Branchless banks and mobile and online banking are some of the trends seen due to technological advancements such as the introduction of artificial intelligence (AI) tools and others.
Competitive landscape: High

6. Hospitals

The UK’s growing ageing population and demand for private health care have signified a shift from the public health system. Around 244 businesses operate in this sector.

The National Health Service (NHS) is struggling with staff shortages, inflation and growing demand. Demand is high for high-quality private health care services, fuelling competition in the sector.

Revenue generation: $115.0 billion (2024)
Employment numbers: 904,000
Market share: 56.9%
Growth rate: The industry declined by -7.8% in 2023.
Profit margins: 24% (2024)
Consumer demand: High
Competitive landscape: High
Government support and subsidies

7. Residential building construction

After the uncertainties that arose from the Brexit vote, as a result of the UK”s exit from the European Union, the residential building construction market is considered a prominent player in the UK economy.

While the pandemic caused a significant decline in output, there’s been an upward tick in new funding to induce land development and house building activity. The purpose is to mitigate the effects of market uncertainties. Around 55,542 businesses operate in the sector.

Factors affecting the industry include inflationary pressure, the cost of living crisis, interest rates and lower propensity to build and construct new developments, leading to a slowdown in housing activity. Rising property prices are another factor worth considering.

Revenue generation: $82.8 billion (2024)
Employment numbers: 271,000
Market share: 15% of the UK construction market
Growth rate: Revenue is forecast to decline at a compound annual rate of 2.9%.
Profit margins: 3.9%
Consumer demand: Lower than previous years
Competitive landscape: Moderate
Government support and subsidies: Government schemes are in place, intended to boost the housing supply. However, the Help to Buy Scheme has come to an end.

8. Management consultants

The management consultants sector is expected to grow at around 2.3% over the current year.

New policies in the financial services sector have pushed banks and lenders to seek the help of management consultants to help restructure businesses and introduce greater efficiencies. Around 180,000 businesses operate in this sector.

Revenue generation: $78.6 billion (2024)
Employment numbers: 460,000
Growth rate: 2.3%
Average profit margins: Gross profit margins above 60%
Technological advancement: The right project management and communication tools heavily contribute to successful and competitive growth in this sector.
Consumer demand: High
Competitive landscape: High

9. Business process outsourcing (BPO) services

BPO service providers primarily serve the financial sector, although other sectors also form a major part of their client base. Around 167,000 businesses operate in the industry, which has been pushed by government pressure to boost information technology (IT) adoption through systems and upgrades.

The industry is heavily defined by remote working employees, and a major part of the businesses operate in London.

The main purpose of BPO providers is to help companies save on costs. This means they themselves need to remain highly competitive while offering a high-quality service at low prices. Low barriers to entry make the sector highly competitive.

Revenue generation: $73.4 billion (2024)
Employment numbers: 722,000
Growth rate: 5.67%
Average profit margins: Operational profit margin is around 20% to 30% of the service charge.
Technological advancement: Technological advancements play an important role in this industry as greater efficiencies in processes and costs are sought by BPO clients.
Consumer demand: High
Competitive landscape: High

10. General insurance

The general insurance industry is on a slightly downward slope with a CAGR of 1.5%. Around 338 businesses operate, helping consumers with their national insurance contributions alongside car and income insurance.

While automotive insurance has seen a recent uptick, the same cannot be said for income insurance. Property insurance and life insurance, on the other hand, are driving a part of the increase in the market. Other factors affecting the industry include recent Solvency II regulations.

Revenue generation: $72.9 billion (2024)
Employment numbers: 75,500
Growth rate: 1.5%
Average profit margins: 8.6%
Environmental impact: Industry losses due to annual weather conditions have increased fourfold over the past three decades.
Consumer demand: Mixed, depending on the type of insurance required
Competitive landscape: Moderate

Conclusion

The UK is a highly developed and competitive economy that holds a strong place in terms of global economic growth, output and activity.

With critical sectors making significant contributions to the gross domestic product (GDP), it will be interesting to observe how they develop over the coming years and what type of growth they’re expected to see in a changing global economic climate.

Frequently Asked Questions

What is the largest sector in the UK by revenue?

From Northern Ireland to South Wales, the largest component of the UK’s economy by revenue is the supermarkets sector.

What are the biggest exports the UK produces?

The country produces cars and mechanical power generators.

What is the income tax in the UK?

The income tax rate in the UK ranges from 0% to 45%, depending on the band of income an individual falls within.

How does the UK GDP compare to the world GDP?

The UK is the world’s sixth largest economy by gross domestic product (GDP) and the ninth largest in terms of purchasing power parity (PPP).

How many people are employed directly in the UK?

According to the Office for National Statistics, the total percentage of the UK”s employed population stands at 75%.