Member Article

UK's internet economy expected to grow £200bn

The UK is the largest digital economy in the G20 as the internet now contributes 10 percent of GDP to the economy, surpassing the manufacturing the retail sectors.

The sector has seen strong growth since 2010, but fresh digital-policy commitments are needed to ensure this trend continues, according to research released today by The Boston Consulting Group (BCG).

The Internet is now the UK’s second-biggest economic contributor behind the property sector, having overtaken manufacturing and retail.

BCG expects the Internet economy to contribute £180bn to the overall economy in 2015, up from £120bn in 2010.

At 10 percent of gross domestic product (GDP), this is a larger percentage than in any other G-20 country. By 2016, the Internet economy will be contributing 12.4 percent of GDP in the UK, compared with a G-20 average of 5.3 percent.

Paul Zwillenberg, a BCG partner and digital economy expert believes the digital sector is only getting stronger: “Among G-20 countries, the UK’s digital economy is the largest as a proportion of GDP, and we expect the UK to retain its position,

“The Internet economy in the UK, which includes online retailing, sales of Internet-related devices, IT and telecommunications investments, and Internet-related government spending, is expected to grow to more than £200 billion over the life of the next government and to double in size from 2010.

“But other G-20 members with rapidly growing online-retail sectors, such as China and South Korea, are closing the gap.

“The UK needs fresh digital initiatives and a new type of ‘Twenty-First Century Industrial Strategy’ to ensure these strong growth trends continue to provide jobs and boost the UK economy over the course of the next parliament.”

Mr. Zwillenberg also notes that the major parties are not taking the ‘Internet economy’ seriously: ’We urge all parties to consider a more comprehensive industrial strategy fit for the twenty-first century to ensure that the Internet remains a strong driver of the UK economy, and we encourage whoever forms the next government to help ensure the UK remains a world-leading digital economy.“

“On the basis of our research into successful digital economies around the world, BCG has identified five core elements that should be incorporated into a new Twenty-First Century Industrial Strategy to consolidate and extend the UK’s position as a leading digital economy.

“This strategy would need to ensure investment in UK digital skills and training, vibrant clusters of Internet and technology sectors, such as London’s Silicon Roundabout, local early stage investment, a high-quality and flexible infrastructure, including mobile, and coordinated, cross-departmental government support.”

This was posted in Bdaily's Members' News section by Ellen Forster .