IOP report finds physics worth £7.3bn to Welsh economy

The physics sector is worth £7.3bn a year and 113,138 jobs in Wales – 10% of GDP and employment – according to a new report.

The Institute of Physics (IOP) and the Centre for Economics and Business Research measured physics’s contribution between 2010 and 2019, finding the economic impact is now greater than from the construction, transport and retail sectors combined.

The executive summary of The Contribution of Physics to the Welsh Economy is available in English (PDF, 969KB) and Welsh (PDF, 979KB).

Physics-based businesses in Wales had a combined turnover of £26.7bn in 2019, a 36% increase in a decade. This was the fastest rise of the four UK nations and well above the UK growth rate of 24%.

The impressive growth in turnover included a doubling of performance in some sub-sectors – physics manufacturing, space and air transport services and machine sales.

There was substantial growth in employee pay, up 41% in the same period – also the largest increase in the UK.

Vaughan Gething, Economy Minister for Wales, said: “This report underlines Wales’s strong advanced manufacturing and technology base.

“We have a track record of delivering high-value manufacturing and innovation, with specific strengths in sectors that rely on physics, such as automotive, aerospace and aviation.

“So it’s very encouraging to see the growing contribution physics is making to the Welsh economy, with the progress we’ve made leading to the creation of more and more well-paid, highly skilled jobs closer to home and spreading prosperity across Wales.”

Eluned Parrott, Head of the IOP Wales, said: “There has been tremendous growth in turnover and pay. The physics sector is made up of good businesses and the rewards of a career at one are clear to see.

“Given the strength in Wales, it is crucial that physics is recognised and valued in the future economy. The forthcoming national innovation strategy is an opportunity to put that ambition on firmer ground and build on the success of the last decade.”

While productivity has increased by 10%, the sector still lags other parts of the UK. However, labour productivity was particularly high in Wales’s energy and telecoms sub-sectors.

The report also found 99% of the 12,170 physics businesses in Wales are small and medium-sized enterprises (SMEs).

Eluned Parrott added: “An important message for policymakers across the UK is that for physics, like the broader Welsh economy, SMEs do plenty of heavy lifting. Future policies cannot lose sight of that fact.”

The IOP will be issuing further reports on physics in Wales throughout 2022.

Read the full report and find out more about the Physics and the Economy project.