UK Industry Model

We always like to start at the top. A basic part of any strategy review is the PEST assessment - Political, Economic, Social and Technical. But what tools should we use to review the general economic situation and understand what is going on in UK industry as a whole.

To help address this issue we have pulled together our own top level UK industry model, primarily from the Treasury's "blue book", but also other sources.

The model shows the main component sectors, based on the high level SIC classifications. The size of block is important - the width is proportional to how many people that sector employees, the height is proportional to the output of the sector. This lets us see at a glance where the powerhouses of the economy are. Also sectors which are shown as wide and flat have a productivity (output/employees) below the overall average, whilst those which are narrow and tall have a high productivity. Output is based on domestic output.

Next we identified where the key flows are between the sectors. The percentage on the arrow shows the proportion of the sector's work that flows to another sector - using the domestic and intermediate consumption as it's base (ie excludes public sector, capital formation and export). Only major flows are represented.

Finally we put on the domestic market, showing not only how much of each sector flows to the consumer, but also what percentage of the household budget spend that sector represents.

Of course with anything like this trying to get consistent data is a real nightmare. WHilst the government publishes the SIC system, it then doesn't follow it to the letter and near randomly groups things together into fewer groups. It also then makes employment data available to a different granularity than the economy data, and most of the latter is in Gross Value Add (GVA) measures. We'll see if we can get more data to improve the accuracy and granularity of the diagram.

If you'd like more information on the model then please contact us.