Huawei claims £3.3bn contribution to UK economy

In the latest part of its ongoing campaign to fight back against having to remove its communications solutions from UK infrastructure, Huawei has released the findings of a report from business analysts Oxford Economics.

According to the report, Huawei is responsible for a £3.3bn contribution to GDP and supports 51,000 jobs through its economic activity.

Hanging over the report is the decision in July 2020 by the UK government to commit to a timetable for the removal of Huawei equipment from the country’s growing 5G communications infrastructure by 2027 – effectively a huge U-turn to the decision it took only in January 2020 to restrict Huawei’s presence to just the radio access network element of 5G setups.

The call was made after the UK’s National Cyber Security Centre (NCSC) reviewed the consequences of the decision by the US on 15 May to extend its restrictions on the sale of hardware and software to so-called “high-risk” suppliers such as Huawei, leading to Huawei being unable to purchase equipment from longstanding suppliers.

The NCSC noted that such a move created uncertainly around the Huawei supply chain, and that the UK could no longer be confident that it would be able to guarantee the security of future Huawei 5G equipment. To that end, the UK government said it was making it illegal for UK telcos to purchase Huawei 5G network equipment from the end of this year.

Yet, as soon as it made its decision, the UK government conceded that there would be a price to pay, calculated by the UK’s mobile operators to be running into the billions.

In addition to these costs, Huawei attempted to further its case by stressing its intrinsic value to not only the UK comms market, but the economy in general. The Oxford Economics study is the third in a series that looks at Huawei’s economic impact on the UK.

It provided an update on Huawei’s contribution, looking at the impact of business activity on employment, GDP, and taxes paid in the UK over the five years from 2015 to 20109, and revealed Huawei’s economic reach across the nations and regions of the UK.

Fundamentally, the report calculated Huawei’s contribution to the UK economy has grown by 180% in real terms in the four years from 2015 to 2019. In 2019 alone, Huawei was said to have also paid £1.1bn in UK tax revenues – a sum that the company highlighted was sufficient to pay for over 30,000 teachers’ salaries.

Around £400m of investment is contributed to the East of England, where Huawei has research facilities in Cambridge and Ipswich. Just before the ban was applied, Huawei received permission to build a research and development and manufacturing centre in Cambridge, UK. Huawei will invest £1bn in the first phase of the project, including construction of 50,000m² of facilities on nine acres of land, and will create around 400 local jobs.

Once fully operational, the complex will become the international headquarters of Huawei’s optoelectronics business, with the research and development (R&D) and manufacturing centre focusing on researching, developing and manufacturing optoelectronics products.

Huawei said that Scotland benefited by £149m, Northern Ireland by over £46m, and the North West of England by £235m. The report said that Huawei also spent more than £1.3bn with suppliers in 2019, and £4.1bn with suppliers in the past five years. While its biggest single contributions were in London (28.%) and the South East (21.2%), nearly half of its economic impact was in other parts of the UK.

Commenting on the study, Pete Collings, director of economic impact consulting at Oxford Economics, said: “This report is an objective way to show the full extent of Huawei’s economic impact in the UK.

“Companies like Huawei are major contributors to the UK directly, but their impact is extended through the spending they undertake with other UK firms. This spending, and the further economic activity it generates, sustains jobs across the country, contributing to UK GDP and government tax revenues.”