Counterfeit goods costing UK economy £9.2bn

The UK economy is missing out on billions a year as a result of the global trade in counterfeit goods, which was behind more than 86,000 lost jobs in 2016, according to the OECD

In terms of UK imports, the OECD report estimates that fake goods imported to the UK were worth £13.6bn in 2016, equivalent to 3% of genuine imports, up from £9.3bn in 2013. The most common imported fakes include mobile phones and accessories, clothes, footwear, handbags, and games.

The value of counterfeit and pirated British goods sold worldwide was estimated at £16.2bn in 2016, up from £13.4bn in 2013 and equivalent to 3.3% of UK manufacturing sales.

UK goods particularly targeted by counterfeiters include perfumes, cosmetics, clothing, footwear, leather goods, telecoms equipment, electronic goods, cars and motorbikes.

In absolute terms, IT kit, particularly mobile phones and computers, were the most counterfeited type of goods, with an estimated value of £2.5bn of fakes imported to the UK in 2016.

In relative terms, clothing, footwear, leather goods and handbags, and toys and games were the most targeted by counterfeiters, with fakes accounting for 9.3% and 8%, respectively, of UK imports from these product categories.

Overall, this fake trade led to estimated forgone sales by UK businesses £9.2bn, or 2.7% of total sales in the wholesale and retail sector. The total volume of UK companies’ forgone sales due to infringement of their IP rights in global trade amounted to £11bn, up from £8.6bn in 2013.

The OECD says that lower sales reduce the demand for labour. It calculates job losses in the UK that inevitably result in the retail and wholesale sector due to counterfeit and pirated imports totalled almost 60,000 in 2016. The total number of jobs lost in UK industries due to the global infringement of their trademarks amounted to over 27,000 in 2016, while altogether, at least 86 300 jobs were lost due to counterfeiting and piracy .

The report says the UK has lost out on over £660m of personal income tax and social security contributions, along with £582m of corporate taxes and £1.8bn of VAT, as a result of fake imports.

The OECD warns the UK is one of the top destinations for counterfeit goods just behind the US, Saudi Arabia and Germany.

More than half of the counterfeit and pirated goods imported to the UK were bought by people who knew they were buying fakes. Most fake imports to the UK come from China, Hong Kong, Turkey, India, Pakistan and Bangladesh.

The combination of trade in fake British products and UK imports of counterfeit goods also hurt public finances as it resulted in forgone tax revenues from the retail and wholesale sector plus UK rights holders of £4bn, the report calculates.

The OECD says earlier analysis of customs seizures from around the world suggests the global trade in counterfeit goods was worth over half a trillion dollars in 2016, or 3.3% of global imports. As well as economic losses, counterfeit trade exposes consumers to health and safety risks of substandard products, from pharmaceuticals to electronic goods.

Marcos Bonturi, OECD public governance director, said: ‘These findings clearly show the need for ‎continued vigilance and for the strengthening of measures to counter illicit trade in the UK and abroad.

‘Good governance is an essential element of this equation. Countries need to work together if they want to win the fight against illicit trade and against all other illicit activities linked to it.’

OECD report, Trade in counterfeit products and the UK economy