The Big Picture

2.1. Delivering direct economic impact across the United Kingdom

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Post Office is the largest retailer in the United Kingdom – and one of the largest in Europe – thanks to its unrivalled branch network of more than 11,500 branches across all four nations. Indeed, few other businesses can make claim to such an extensive physical presence. While the vast majority of branches operate on a franchise basis, each branch is supplied, served and supported by Post Office – through a significant supply chain infrastructure, field teams and support functions – so that branches can, in turn, serve and support their communities.

In fact, London Economics’ analysis found that the combined expenditure of Post Office and its branch network generated an overall economic impact of c.£4.7 billion in the financial year 2021-22.⁵⁶⁷ To put this into context, this was slightly higher than the estimated
economic impact of Heathrow Airport after a return to ‘business as usual’ conditions post-pandemic (Centre for Economics and Business Research, 2021).

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Nearly £2 billion of economic value was directly generated by Post Office Limited and branch expenditure – whether that is the wages of Post Office employees, spending on stock for Post Office branches, or the other business costs associated with the day-to-day operation of Post Office branches.

However, the direct expenditure figure does not capture the full economic impact of Post Office. This direct expenditure creates a wider ripple effect (known as the indirect and induced impact) throughout the United Kingdom’s economy, by generating additional economic activity estimated to be £2.8 billion.

Within this, the indirect impact highlights the impact of Post Office expenditure on goods and services throughout its extensive supply chains, which, in turn, has wider knock-on effects as Post Office’s direct suppliers make further purchases throughout the economy to meet their needs. For example, if a Postmaster purchases equipment for their Post Office branch, then income will be generated for the supplier of that equipment, who will then go on to purchase inputs to meet their own demands (Weisbrod & Weisbrod, 1997).

In addition to this, there is a wider induced impact resulting from the expenditure of Post Office staff and the staff of businesses in Post Office’s supply chain. These individuals will spend their income throughout the economy (such as on their local high streets), which further generates wage income for employees of those other businesses, who then spend their own income on goods and services.⁸

As such, Post Office’s expenditure not only benefits those who directly receive that spending (such as suppliers and employees), but it also helps to support a multitude of businesses and jobs throughout the whole country through the knock-on ripple effect resulting from that initial spending. The indirect and induced economic impacts demonstrate the unseen contribution by Post Office to the United Kingdom’s economy, not only in directly providing vital services to both households and small businesses, but also by supporting communities throughout the country through its basic operations.

⁵ This includes all Post Office branches and expenditure by Post Office Limited.
⁶ This estimate was based on economic activity that occurred during the Covid-19 pandemic, so may represent an underestimate of the total
impact compared to non-pandemic years.
⁷ A detailed explanation of the methodology used to calculate the direct, indirect and induced impact is available in Annex A1.1.
⁸ A more detailed explanation of the direct, indirect and induced effect is available in Section A1.1 in Annex 1.

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