THE ECONOMIC AND ENVIRONMENTAL IMPACT OF THE HISTORIC AND CLASSIC MOTOR INDUSTRY IN THE UK

50 11. Aggregate economic impacts 11.1 Introduction The economic impacts discussed as part of Sections 4-10 represent the direct revenue, GVA, employment and employee compensation generated by the composite parts of the classic vehicle industry. However, there is a wider economic footprint supported that needs to be acknowledged. In particular our approach considers two further impact layers: indirect impacts and induced impacts. 11.2 The indirect impact To conduct their operations, firms in the classic vehicle sector inevitably need to purchase goods from its suppliers. This helps to support output and jobs amongst their suppliers. In turn, these suppliers place demands on their suppliers which supports further output and jobs. The indirect impact captures the revenue, GVA, employment and employee compensation supported along the supply-chains as a result of these operations. We had to be careful to not ‘double - count’ any impacts. This would occur where firms within the classic car sector purchase goods and services from others within the sector – for example a restoration firm purchasing parts from a specialist provider. If this were to occur and we captured this through the indirect impact of the restoration firm and the direct impact of the specialist provider, the same impact would be measured twice. Every effort has been made within our models to strip out this double-counting, ensuring the indirect impact only reflects spending by firms within the classic vehicle sector, on other firms not in the classic vehicle sector. 11.3 The induced impact The workers who receive income and employment benefits through the direct (firms in the classic vehicle sector operations) and indirect (the suppliers to the sector and in turn their suppliers) channels spend their increased earnings on goods and services in the wider economy. This helps to further stimulate demand, supporting additional revenue, GVA, employment and employee compensation. The induced impact captures these wider-spending effects. We define the aggregate economic footprint supported by the classic vehicle sector to be the sum of the direct, indirect and induced impact layers. 11.4 Input-output modelling To model the relationships that exist between these impact layers, we use several bespoke input-output models. These models examine the structure of a firm or industry’s supply -chain, allowing us to quantify the economic activity supported along them. In addition, by considering the typical distribution of household spending, the model allows us to calculate the output and employment associated with the induced impact layer. To generalise our results, multipliers are then calculated. These multipliers are essentially ratios: providing the indirect and induced demand stimulus that is supported for a given amount of direct economic contributions. Given the complex nature of the classic vehicle industry, with firms ranging from museums to garages, we have calculated several distinct input-output models.