Industries with the Biggest Increase in Profit Margin in the UK in 2023

1. Urban Passenger Rail Operations in the UK

Percentage Point Increase for 2023: 188.1pp

Over the five years through 2022-23, revenue is expected to contract at a compound annual rate of 1.7% to £3.7 billion. COVID-19 disruptions decimated urban rail traffic, driving this revenue loss. London is the largest market for urban rail services, accounting for more than 90% of passengers. Consequently, Transport for London (TfL) dominates the industry through its ownership of the London Underground, the Docklands Light Railway and the London Overground. Industry performance is predominately contingent on the number of passengers using these services, which is determined by several demographic and social factors, including the size of the urban population, the... Learn More

2. Pension Funding in the UK

Percentage Point Increase for 2023: 114.1pp

Pension funds were rocked in 2022 when a fire sale of gilts meant that funds were forced to sell assets to meet margin calls. The hit taken to pension assets means that revenue fell by 245.8% in 2022-23, resulting in a loss of £234.3 billion. The past few years marked a change from defined benefit (DB) to defined contribution (DC) schemes dominating the industry. Following the onset of the pandemic, equity markets were destabilised, causing asset values to decline in 2020. However, the steady recovery of economic conditions following the end of the COVID-19 outbreak was mirrored by equity values... Learn More

3. Scheduled Passenger Air Transport in the UK

Percentage Point Increase for 2023: 77.1pp

The industry includes all British companies that transport passengers on domestic or international routes on regular timetables. Passenger air travel is largely considered to be discretionary and industry performance is influenced by consumer and business confidence, the level of disposable income and airfares. Although passenger numbers remain fairly robust during weak economic conditions, changes in consumers' propensity to spend on discretionary items has a more profound effect on revenue, as price competition intensifies when consumer confidence is low.

Industry revenue recovered from a post-EU referendum decline, growing during the two years through 2018-19, as strengthening demand for low-cost carriers offset the... Learn More

4. Casinos in the UK

Percentage Point Increase for 2023: 61.3pp

Companies that own and operate casinos offer various gambling activities, including card games, slot machines and roulette tables. Casino companies also generate revenue from amenities like food, drink and accommodation. Before the COVID-19 outbreak, the industry was already subject to intense competition from online casino offerings. According to the Gambling Commission, remote casinos' gross gambling yield was 217.6% higher than bricks-and-mortar casinos in 2019-20. This competition contributed to revenue declining over the two years through 2019-20. Stringent COVID-19 restrictions resulted in an 88.4% plunge in revenue over 2020-21, making the casino industry among the worst impacted by the pandemic.

Over the... Learn More

5. Budget Airlines in the UK

Percentage Point Increase for 2023: 41.7pp

The Budget Airlines industry includes all British airlines that are considered as no-frills airlines, meaning that they offer low ticket fares by eliminating many traditional passenger services. Services such as baggage allowance and on-board meals are not included in ticket prices, but are instead offered as ancillary services, where consumers purchase them separately. The industry is highly concentrated, consisting of only four operators. Demand for industry services is determined by external factors such as business and consumer confidence, household disposable income, and outbound and international tourist numbers. Shocks such as natural disasters, terrorist attacks and disease outbreaks also affect demand.

Industry... Learn More

6. Airports in the UK

Percentage Point Increase for 2023: 34.5pp

Demand for the Airports industry is primarily influenced by trends in domestic and international air travel, as operators provide support activities to both passenger and freight transport operators. Airports have increasingly diversified their sources of revenue, expanding into other commercial markets such as retail concessions, other property and car parking facilities. Industry revenue is expected to be very highly volatile over the five years through 2022-23, as growing demand for airlines over the first half of the period boosted demand for support services provided by airports. However, disruption from the COVID-19 (coronavirus) pandemic offset this growth, causing revenue to contract... Learn More

7. Real Estate Investment Trust Activities in the UK

Percentage Point Increase for 2023: 28.0pp

Real estate investment trusts (REITs) are attractive investment vehicles, as they are exempt from corporate tax. A reduction in REIT requirements and restrictions has encouraged new entrants, although many were hit hard by the retail crash during the COVID-19 outbreak. Revenue is expected to decline at a compound annual rate of 4.2% over the five years through 2022-23 to £6.2 billion, and profit is expected to be 17.7%.

As many REITs own some form of retail and office property, lockdowns and social distancing measures during the pandemic meant the REIT industry lost revenue. Many REITs were forced to sell assets to... Learn More

8. Online Travel Agencies in the UK

Percentage Point Increase for 2023: 25.1pp

Over the five years through 2022-23, revenue has fallen at a compound annual rate of 5.6%. Faltering conditions in the air travel market weigh on finances as Online Travel Agencies (OTAs) scrabble to issue refunds and make alternative travel arrangements for consumers when airlines go bust or strikes happen. Unsurprisingly, OTAs did not escape the effects of the pandemic and travel restrictions across the globe with plummeting sales, litigation threats and restructuring activity. Bookings exploded following the scrapping of travel restrictions for all travellers in March 2022. Still, OTAs' troubles weren't over when borders reopened – the spike in passenger... Learn More

9. Sea & Coastal Passenger Water Transport in the UK

Percentage Point Increase for 2023: 24.2pp

The Sea and Coastal Passenger Water Transport industry offers a range of services, including cruises, ferry services and fishing charters. The industry is therefore reliant on domestic and international tourism. Cruise ships have performed robustly over most of the past five-year period and have expanded by marketing value, such as all-inclusive holidays. However, demand for international ferry services has wavered as a result of intense competition from air and rail transport. Moreover, travel restrictions in response to the COVID-19 (coronavirus) outbreak caused passenger numbers to plummet during 2020-21.

Industry revenue is expected to decline at a compound annual rate of 8%... Learn More

10. Banks in the UK

Percentage Point Increase for 2023: 23.4pp

Over the five years through 2022-23, UK banks' revenue is expected to decline at a compound annual rate of 0.5% to £109.6 billion, including anticipated growth of 14.8% in the current year. Low interest rates after the financial crisis limited the interest earned by banks from loans, hitting income. At the same time, a stricter regulatory environment, including increased capital requirements introduced under the Basel III banking reforms and ring-fencing regulations, constricted lending activity. To protect their profitability, banks have shut the doors of lots of branches and made substantial job cuts.

The COVID-19 outbreak triggered a dramatic decline in revenue... Learn More