Digital sector contributes £400m a day to UK economy

The digital economy contributes £400m to the UK each day and grows more quickly than the economy itself, according to new government figures.

Companies in the digital sector generated £149bn for the UK in 2018, accounting for 7.7% of the overall economy, according to the Sectors economic estimates released by the Department for Digital, Culture, Media and Sport (DCMS).

The figures show a growth increase of 7.9% on the previous year, and the report points out that digital businesses grew about six times more rapidly than the whole economy, which grew by 1.4%.

According to the report, the digital sector had been growing in line with the wider economy until 2010. The turning point came in 2015, when the sector started to outstrip overall growth.

“Technology is a sweet spot of our economy, bringing jobs and wealth across the country,” said digital minister Matt Warman. “The success is thanks to our business-friendly environment and fantastic workforce.

“We are working hard to continue this momentum by strengthening regional tech clusters, supporting digital businesses and investing in people’s digital skills.”

The report highlights some digital businesses that have contributed to that result, such as Newcastle-based accounting software company Sage, which employs 13,000 people. It also credits electronic manufacturers such as Newport-based IQE, a manufacturer of computer chips that are used in products ranging from electric cars to 5G devices.

The UK has one of the world’s most significant tech sectors, with £6.3bn of venture capital investment in 2018, and ranks fourth in the world for scale-up investment after the US, China and India. The country has been urged to develop a new digital trade plan to continue thriving after Brexit.

Trade association TechUK released its vision for digital trade in January 2020, urging the UK to seize the global digital trade opportunity, which is estimated to be worth more than $25tn.

TechUK’s document set out 12 principles to make that shift, covering data, tariffs, intellectual property, regulatory cooperation and trade facilitation.

It also noted a number of challenges to be tackled, such as the growing trend towards data localisation. The association said the UK should oppose the movement described as “balkanisation” of digital markets in exchange for market access.