The UK Remains the Largest Digital Economy in the G-20, but a New Industrial Strategy Is Needed to Bring the UK into the Twenty-First Century
LONDON—The UK has retained its position as the largest Internet economy in the G-20, according to research released today by The Boston Consulting Group (BCG). The sector has seen strong growth since 2010, but fresh digital-policy commitments are needed to ensure this trend continues.
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 £180 billion to the overall economy in 2015, up from £120 billion 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.
“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,” said Paul Zwillenberg, a BCG partner and digital economy expert. “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.”
“The Internet is the fastest-growing component of the economy in the developed and developing markets of the G-20,” Mr. Zwillenberg said. “It creates jobs across many industries, from software and app developers to people who fix broken iPad screens, and everything in between. A digitally informed Twenty-First Century Industrial Strategy will help ensure that the UK remains at the forefront of the digital economy, attracting and retaining the jobs that come with it.”
Mr. Zwillenberg further commented, “Although the major parties have pledged faster and better broadband and mobile, we are not satisfied that any party is taking the Internet economy seriously enough. 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.”
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