UK businesses can create up to 470,000 jobs with circular models
Green Alliance study highlights that investment in circularity, with proper incentivisation, has potential to raise profits and support employment.
Businesses adopting circular economy principles are increasing revenues, according to new research from Green Alliance.
The ‘In the Loop: Stories of Businesses Delivering the Circular Economy’ report demonstrates how large-scale circular business models have generated economic and social benefits throughout supply chains, whilst creating significant employment opportunities across the UK.
Recent analysis from Strategy&, a PwC consulting team, suggests that UK gross domestic production could rise by one per cent with just modest increases in circularity, supporting up to 171,500 jobs. However, broader implementation, according to Green Alliance, could deliver greater returns, potentially creating over 470,000 UK jobs by 2035.
Government needs to ‘transform the economy’ to meet goals
Green Alliance’s research identifies three critical areas where government intervention could accelerate the circular economy transition and support business growth:
- Finance reforms and incentivisation
- Consumer confidence measures
- Skills development
The report suggests that the Treasury should go beyond levelling the playing field between circular and linear businesses, to provide incentives that reward circular businesses, as well as offering dedicated funding to support circular business models.
Addressing VAT disparities that currently disadvantage repair and refurbishment services compared to new product purchases is highlighted as significant to making circularity viable for businesses.
Giving consumers a real right to repair directive and improving ecodesign standards to ensure that products are durable and repairable will be essential to improving consumer confidence in these circular services.
Green Alliance also suggests that a skills development plan would attract and train workers with transferable skills from other industries, equipping them with the capability for new green jobs. Strategic funding for universities, colleges and training providers, along with a green skills “super deduction” - tax relief for businesses investing in training - are recommended as ways to achieve this.
The research comes as England’s first circular economy strategy is due to be released for consultation late in 2025, with report author, Libby Peake, joining as a member of the government’s Circular Economy Taskforce.
Circular business opens market opportunities and business profits
In the face of these recommendations, the ‘In the Loop’ report looked at ten established companies who have begun operating circular models on an industrial scale to demonstrate the benefits of investment.
Emily Carr, Policy Advisor at Green Alliance and report author, commented: “Our research shows that large, established companies are already increasing their sales through circular business models, while their customers are benefiting from lower prices and attractive products.”
One of the advantages outlined in the report has been the additional revenue streams opened up by larger retailers adopting circular models, creating more opportunities across the supply chain which have enabled new businesses to emerge in a growing market.
Screwfix and B&Q, both subsidiaries of Kingfisher, have launched refurbished product lines, with both companies expecting these services to be an area of growth. Screwfix now offers a range of 1,800 refurbished products, with around 100,000 sold in 2024-25, and have found that these products are outperforming new products.
Jason Gordon, Returns and After Sales Manager at Screwfix, added: “We actually get higher customer review scores for a refurbished product in most instances than the original product.”
Business collaborations have also offered new market opportunities, with Ocado Retail’s recent pilot refill scheme launched to customers in 2024, offering refillable containers for everyday products and aiming to create a system for the whole online retail sector to use.
The scheme saw up to 86 per cent return rates of reusable packaging through Ocado deliveries, with the retailer working with Berry Global for vessels, GoUnpackaged for washing and logistics, Avery Dennison for RFID tracking, and Polytag for QR code technology.
Supporting jobs and reducing waste
The research also highlights how circular approaches are supporting existing agricultural work as well as generating new employment opportunities.
A recent partnership between Tesco and Branston, one of the UK’s biggest potato suppliers, has seen the retailer committing to buying Branston’s entire crop to reduce waste and support farmers.
Fresh produce that meets market standards is sold whole in supermarkets and the rest is used for ready meals, frozen foods, or sold on to other suppliers in the hospitality sector.
Further investment in refurbishment and remanufacture have also allowed for the creation of new jobs, with programmes offered by companies such as Caterpillar and JCB aiming to train or retrain workers to return end-of-life products to ‘as new’ condition.
With the UK government developing a strategy to position it as a global leader in circularity, the report emphasises that supporting circular businesses has to be a cross departmental effort.
While these businesses are already delivering measurable benefits across the economy, realising their full potential requires coordinated government support through finance, regulation and skills development.
Carr added: “The government has an opportunity to transform the economy with England’s first circular economy strategy, due later in 2025. We know that making better use of resources can boost economic growth, the government’s number one mission, and provide jobs in the years to come.”
