Addressing racial disparities could benefit UK economy by £37 billion, new analysis finds

Addressing racial disparities could benefit UK economy by £37 billion, new analysis finds

October 7, 2025

Addressing racial disparities could benefit UK economy by £37 billion, new analysis finds

Business in the Community (BITC), in collaboration with the University of Dundee, has today published new analysis showing that closing the ethnicity participation and pay gaps could benefit the UK economy by £37 billion (or 1.44% of UK GDP) annually. This amounts to an added value of £712 million per week to the UK economy.[1]

This analysis comes as BITC celebrates the 30th anniversary of its Race Equality campaign. This figure has been published in BITC’s ‘Then, Now, Next: 30 Years of Action and Impact’ report, detailing the history and impact of its Race Equality campaign.[2] The campaign was established in 1995 in collaboration with UK senior business leaders and with the support of the then Prince of Wales. 

The analysis, which looks into the total cost of the UK’s ethnicity pay and participation gaps, follows on from similar analysis undertaken in 2016 for ‘Race in the Workplace: The McGregor-Smith Review’, which found that closing the ethnicity gap would benefit the UK economy by £24 billion annually in 2016. 

BITC’s Race at Work 2025 survey provided insights into the current state of race equality in UK workplaces. Some insights include: 

  • Only half of UK employees are encouraged by their employers to use their skills to volunteer or support young people. Despite a rising number of young people not in education, employment, and training, only 35% of UK organisations have formal work experience programmes and 42% have apprenticeship programmes. 
  • Six in 10 large employers in the UK have a champion or executive sponsor for fairness and equality. 
  • Half of ethnically diverse UK employees feel they have to leave their current organisation to progress in their career, compared to four in ten White UK employees. 
  • Despite half of the UK wanting to stand in solidarity with ethnically diverse employees, there has been a decrease in the number of employees feeling like people in their organisations are comfortable talking about race in the workplace, dropping from four in 10 employees in 2021 to one third of employees in 2025. 
  • Four in 10 organisations have made a public commitment to delivering social value through the procurement and supply chain process.[3]

To reinforce the importance of closing the ethnicity gap, BITC is refreshing its Race at Work Charter, encouraging organisations to pledge to seven commitments. The refresh of the Charter highlights the importance of supporting young people into good work and enterprise – which BITC has been working on as part of its partnership with Youth Futures Foundation, through a programme called ‘Talent Unlocked’. It also highlights the need to move from allyship to solidarity. The Charter, among other commitments, also encourages businesses to collect and publish ethnicity data voluntarily. The Government’s Equality (Race and Disability) Bill will ensure that the publishing of ethnicity pay gap figures is mandatory for all large businesses. 

Sandra Kerr CBE, Race Equality Director at Business in the Community, said: 

The past 30 years have seen great change when it comes to race equality in the workplace. I am pleased to see that race inclusion remains a priority for many businesses, despite the current geopolitical climate. This campaign has worked for 30 years to ensure that all ethnically diverse employees feel valued, respected, and that they belong in, and can bring their whole self to, the workplace. I am eager to keep the momentum going to close the ethnicity gap so that not just individuals and businesses, but the UK as a whole can benefit.

Professor Ian Thomson, University of Dundee, said: 

Using a similar methodology to that used in the 2016 Race in the Workplace: The McGregor-Smith Review, I was able to calculate the total value to the UK economy that addressing racial inequalities can bring. This value was based on analysis of official government statistics, augmented by findings from the BITC Race at Work surveys, and by applying the model used by the Office for National Statistics for their 2022 release on ethnic pay gap data. 
   
Reflecting on the results of this analysis, I was disappointed to conclude that overall things have got worse rather than better since 2016. The case for action has been strengthened; we know how to close this gap and there is an urgency to take action now.

Richard Iferenta, Partner and Vice Chair at KPMG and Chair of BITC’s Race Equality Leadership Team, said: 

We are more than aware that our work to tackle the challenges has only just begun. The next stage demands bolder collaboration with government, key employers, and industry leaders to move from insight to tangible impact. It is vital we continue to discover and tell the stories that inspire action. Yes, we’ve made progress. But this journey is far from over. I remain firmly committed to standing alongside the remarkable team at BITC, driving forward the change our economy, and our communities, deserve.

ENDS

Notes to the editor

  1. [1] This figure consists of a participation gap of £20 billion, as well as a £17 billion ethnicity pay gap. The full methodology of the analysis undertaken to reach this figure is available upon request. 
  2. [2] Business in the Community: Then, Now, Next: 30 years of action and impact    – Business in the Community 
  3. [3] All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 5526 adults. Fieldwork was undertaken between 4th August – 11th September 2025. The survey was carried out online. 

For further information, please contact Polly Dacam, Press Officer, on 020 7566 6638.

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