The financial impact of tourism in Cornwall: an assessment

There appears to be some confusion in the press about the role of tourism in the Cornish economy. Estimates of its financial contribution fluctuate alarmingly and are often contradictory. For instance …

“Tourism is worth between £1.7bn and £2bn a year to Cornwall, around 20% of the county’s annual GDP, Mr Conchie [CEO of Cornwall Chamber of Commerce] said, while an estimated 53,000 people are employed by the industry.” (Sky News, August 2018)

“Tourism is 25%-28% of gross value added of Cornwall, and the visitor economy could be as much as £2.4 billion over the year.” (Kim Conchie, Penarth Times, March 2020)  

“Tourism is worth nearly £2 billion to the local economy – 23% of GDP” (Daily Mirror, March 2021)

“a lot of people don’t appreciate just how important tourism is. It is 33% of our GDP“. (Cornwall Live, August 2021)  

“Tourism … is about a third of our GDP” (Kim Conchie, Daily Express, September 2021)

Occasionally, the confusion seems to be caused by an elementary failure to understand the difference between spending on the one hand and Gross Value Added (GVA) or Gross Domestic Product (GDP) on the other. As the absolute figure for GVA/GDP is lower than the spending figure, calculating the proportion of GVA by dividing GVA by spending will inflate its importance.

So what is the actual picture, taking care to compare like with like?

In order to calculate the proportion of GVA in Cornwall that is contributed by tourism we need to know the total GVA and the GVA contributed by the tourist sector. Unfortunately, while the regional data for the total GVA is available on an annual basis (Office for National Statistics [ONS], Regional gross value added (balanced) by industry: all International Territorial Level (ITL) regions, Table 2b, 2018 prices), the ONS does not provide a separate tourism sector. However, it has estimated the proportions of its existing sectors that can be attributed to tourist activities (ONS, UK Tourism Satellite Account: 2017. Tables). For example, it estimates that 76% of the ‘accommodation services for visitors’ can be accounted for by tourism, 37% of ‘cultural activities’ and so on. While these ratios are clearly open to question, we can use them as a basis for calculating the overall importance of tourism.

If we do this for Cornwall’s GVA we find that the direct contribution of tourism in 2013 was 8.1%, rising to 9.0% in 2019.

However, the impact of tourism does not end there. In addition to the direct impact of any economic sector there are indirect and induced effects. Indirect effects include the purchase of goods and services from other sectors, for instance when a hotel buys bed linen from a local company. Induced effects include the spending of those earning their living in that sector. This might include things like buying their groceries from the local supermarket.

To allow for this we require a multiplier that includes these indirect and induced effects. Such multipliers for sectors are available on an annual basis from the Scottish Government (The Scottish Government, Supply, Use and Input-Output Tables: 1998-2017, Type II, output, income, employment and GVA multipliers Scotland 1998-2017). In 2017 the multiplier was 1.5 (ONS, Annual Business Survey 2017 NUTS3 and LAU1, aGVA data for Tourism in England). If we then apply this to the tourism estimates for Cornwall, it will increase the role of tourism in Cornwall to 12.2% in 2013, rising to 13.5% in 2019.

This result – a total impact of 13.5% in 2019 – is not that far away from the conclusions reached by the occasional ONS research on the impact of tourism at a regional level. Their estimate for 2013 (ONS, 2016, The regional value of tourism in the UK: 2013) gives a direct tourism component of 9.9%, rising to 15.3% once the direct and induced effects are factored in. Clearly there is some variation here but, given these various estimates, we can safely conclude that the total financial contribution of tourism to the Cornish economy is somewhere between 12% and 16%. This is a lot lower than the figures bandied about by those with a vested interest in tourism.

Note for journalists – next time you hear someone pluck a figure out of the air ask them for the details of their source and refer them to the research here.

Moreover, this assessment of the contribution of tourism to Cornish GVA does not take into consideration either the social costs (of second homes, congestion, pressure on services), environmental impact (a study of Cumbria – A Carbon Baseline for Cumbria, 2020, p.22 – concluded that tourist activities account for almost half its total greenhouse gas production. It would no doubt be similar for Cornwall) or the longer-term disastrous cultural effects on the Cornish people.