UK needs a new industrial strategy to retain its title of world-leading internet economy: Boston Co
The UK needs a new industrial strategy fit for the 21st century if it is to retain its position as a digital world leader, the Boston Consulting Group said today, as it released research showing the internet now contributes 10% to UK gross domestic product (GDP).
While the UK currently leads the G20 for the importance of its internet economy, countries including South Korea and China are gaining fast, the research suggests, days ahead of the UK May 7 general election.
Online retailing forms part of the internet economy, under the BCG definition, alongside sales of internet-related devices, IT and telecommunication investment, as well as internet-related government spending.
The BCG says the internet will add £180bn to the overall UK economy in 2015, up from £120bn in 2010. That makes it the second-highest contributing sector after property, according to BCG calculations, contributing 10% of the total – more than either manufacturing or retail. By 2016, the company predicts that proportion will reach 12.4%, compared to a G20 average of 5.3%. By the time this next government stands down, in 2020, BCG suggests the UK's internet economy will have reached more than £200bn in value, doubling in size from 2010.
"The internet is the fastest-growing component of the economy in the developed and developing markets of the G-20," said Paul Zwillenberg, partner and digital economy expert at BCG
. "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."
He added: "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."
Zwillenberg puts five core elements firmly at the heart of an industrial strategy. "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," he said.