Digital industries lead UK economy

The digital sector has become the best performer of the UK economy, according to the Centre for Economics and Business Research (CEBR).

Pace of growth for technology, internet, media and creative businesses outperformed the economy overall by more than three times, growing by 4.6% in 2018, said CEBR deputy chairman Douglas McWilliams.

This means digital businesses performed better than manufacturing, mining, power generation and water supply, McWilliams pointed out, adding that the greatest threat to the digital economy is access to talent.

In 2018, London attracted more technology workers than the rest of Europe, with about 357,900 software developers in the city, but that is expected to change in future.

“Looking forward, the biggest Brexit challenge will be the availability of skilled labour as migration from the EU slows,” said McWilliams.

Because of the uncertainty around Brexit outcomes, skilled EU workers, notably with expertise in areas such as artificial intelligence and data science, are already looking elsewhere to build their careers, while professionals from EU who are already in the UK are re-planning their futures. 

Although the UK and London hope to continue to be hubs for digital talent as well as startups despite visa requirements, nearly one-third of tech startups have started to ensure they have a presence in mainland Europe ahead of Brexit.

The UK government has also been working to develop home-grown talent in view of Brexit, as the number of EU nationals choosing to live and work in the country continues to fall.On the performance of the digital sector, the CEBR also noted that a trend that is becoming apparent is that digital businesses are moving to locations outside London, partly priced out by expensive property in the capital.

But despite the challenges ahead, the digital sector is expected to remain strong.

“The UK’s digital economy remains Europe’s largest and most successful, and is likely to remain so for the foreseeable future,” said McWilliams. “At a time when the outlook for many other sectors is bleak, this is a welcome ray of sunshine.”