Expanding Heathrow: the impact on UK businesses

The government-appointed Airports Commission has finally reached a conclusion and made a “clear and unanimous” recommendation that Heathrow needs a third runway. Now business leaders are calling on the Prime Minister to act swiftly for the good of the economy. 

Importance of expansion

The Commission claims that a third runway could generate 70,000 new jobs by 2050, and up to £147bn for the economy. In contrast, expansion of Gatwick was predicted to bring in just £89bn.

One of the key distinctions seems to be Heathrow’s focus on long-haul connections, particularly to emerging markets, which are becoming increasingly significant trading partners. Gatwick’s pitch is primarily based on short-haul leisure flights and internal connections to UK cities.

SMEs have understandably been divided on the conclusion. Some local businesses are concerned at the impact the expansion will have on towns in the area, others would prefer an expansion of regional hubs, but many more back the Heathrow expansion because of its potential to boost exports and its useful location on the M4 – a vital connection for companies outside the south east.

Time is of the essence

With the argument over where to expand airport capacity seemingly settled, several business groups have now switched their attention to campaigning for swift action to secure the economic benefits as soon as possible.

The Federation of Small Businesses (FSB) has already called on ministers to “make a bold and swift decision”, and chairman John Allan said, “there must not be any further excuses or delays. To do so is to put the long-term economic health of the UK at risk.”

His sentiments were subsequently echoed in an open letter from more than 270 business leaders, which states that “lack of hub capacity is holding back the growth of UK businesses that want to fly directly to emerging markets; trade and transport their goods via air freight; create more jobs and connect to the UK’s regions.”

Many surveys have suggested that optimism and the urge to expand is high among UK SMEs, and capitalising on this sentiment, and their successful and sustained growth in the past two years, is now the key issue.

While we await further developments, maintaining strong cashflow is essential for stable growth. If you need help keeping yours healthy, contact a Dukes Bailiffs advisor today.