Business development · 6 April 2016

The sharing economy is growing – but working out how quickly is a challenge

sharing economy
Users still have difficulty defining the sharing economy

The number of firms in the sharing economy – as well as the revenue generated and number of people employed by such businesses – is growing, according to preliminary attempts to measure the sector by the Office for National Statistics (ONS).

The UK sharing economy was given a value of £0.5bn in 2014 and is expected to be worth £9bn a year by 2025. Worldwide, shared transport platforms alone are expected to bring in revenues of $6.5bn by 2020.

The new report into collaborative businesses also highlighted the challenges of trying to quantify the size of the sector, given the predominance of micro businesses and self-employed individuals in the space. It also emphasised the non-financial benefits of the sector.

“The focus groups and interviews also revealed that individuals’ use of the sharing economy was not solely about using websites that undercut the traditional economy to save money, but also other non-monetary reasons such as meeting, helping and connecting with others,” wrote the ONS authors.

Users still have difficulty defining the sharing economy, the research also revealed – though they are confident when it comes to identifying big players like Uber and Airbnb. The ONS have pledged to undertake further work to find an agreed definition of the sharing economy.

Rich Preece, a managing director at small business accountancy software firm Intuit QuickBooks, said: “With six percent of the UK public now using sharing economy services to supplement or create income, and 20 percent of these earners making over £2,000 each month, we can’t ignore its impact on the British economy. Through providing a clear definition of the sector we can start measuring its growth, not only to quantify the tremendous opportunities that it brings to the UK economy and its workers, but also to create a better environment for those working within it

“Formalising it as an industry will allow the creation of an improved infrastructure for people sharing services since many things like taxes, retirement and insurance are based on a more traditional employment model. This will encourage more workers to get involved, boosting the industry and helping the growing ranks of entrepreneurs flourish.”

Small business owners in the industry are set to benefit from the introduction of a new tax-free allowance worth £1,000 each year to digital micro entrepreneurs from 2017. The giveaway was announced in chancellor George Osborne’s March 2016 Budget, and welcomed by Airbnb.

Read on to find out how London became the sharing economy capital of Europe.

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Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics – as well as running a tutoring company.