Procurement · 22 March 2017

UK now dependent on “twice as productive” digital economy

Fintech investment
Startups in Britain’s digital economy received £6.8bn in investment in 2016

The UK’s technology businesses achieved a combined turnover of £170bn in 2015, according to a new report that demonstrated the growing strength of the country’s digital economy.

The report, from government-founded startup organisation Tech City UK, provided a fresh assessment of the sector, and concluded that workers at digital companies had productivity levels twice as high as those outside of tech.

Job creation in tech companies was found to grow at twice the rate of the wider economy, generating 85,500 new positions in 2016. In the same year, the average advertised salary for tech jobs reached £50,663, 44 per cent higher than the national average of £35,115.

Investment in Britain’s digital economy since 2012 continued to eclipse that in other European nations, attracting over £28bn in backing from investors. In 2016, tech startups received £6.8bn in investment, over 50 per cent more than the closest rival.

The report confirmed London’s dominance in the UK’s tech sector, with a collective turnover of £56bn – a 106 per cent increase in the past five years. A tech startup is now founded every hour in the capital.

Gerard Grech, Tech City UK CEO, said the report indicated the rapid growth in innovation and productivity from the country’s digital businesses.

“There are now significant tech hubs all over the UK, attracting both international investment and overseas talent,” he said in a statement.

Grech added that high average salaries in the digital economy would be crucial in maintaining access to skilled workers abroad and on home soil as Britain prepares to leave the EU.

Eileen Burbidge, the organisation’s chair and one of our small business decision makers for 2017, said now was the time to capitalise on growth.

“Tremendous momentum and results have been achieved in and by the UK’s tech community in recent years but we must continue to ensure that we have the best possible ecosystem in place to help the sector achieve its full potential,” she said in a statement.

She added: “In addition, we must also commit to ensure that our young people have the skills and aptitude needed for a career in this industry that is having an impact on every part of UK life.”

Despite London continued position as the hub of UK tech, the success of the sector looks to be spilling out across other cities.

Karen Bradley, government culture minister, said that success in the digital economy was “driving growth across the whole country”, and tech companies based outside of London received more investment than those in the capital for the first time in 2016.

In response to the report, William Newton, EMEA director at WiredScore, urged government to leverage the success of the digital economy to ensure that growth continues to thrive.

“Investing in sectors that are future proofed and growing at a significant rate – such as the tech and digital industries – is a safe bet and should be a priority for government. Demonstrating that the UK has the necessary infrastructure and digital skills base will also be key to ensuring that the country continues to be seen as an attractive place for tech investment and to do business,” he said in a statement.

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.