UK’s digital leaders set to deliver £92 billion boost to economy

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DigitalA new report from Virgin Media Business and Oxford Economics claims that the UK’s ‘Digital Leaders’ are set to use digital technology deliver a massive boost to the UK economy in the very near future. The study of 1,000 companies employing 470,000 people claims that the UK economy could see an increase of 2.5 percent in GDP (£92 billion) and create more than a million new jobs over the next two years. According to the respondents, they had already increased their revenues by 4.4 per cent and reduced costs by 4.3 per cent over the past year by making better use of digital technology, generating an estimated £123 billion contribution to the UK’s economy, equivalent to 3.4 per cent of GDP. In terms of jobs, 44 per cent of executives don’t expect any jobs to become obsolete and, across the economy, companies anticipate hiring 1.1 million employees as a result of digital investments.

Looking at the next two years, UK companies are optimistic about the potential of digital to drive growth. While digital is expected to result in some job losses (approximately 300,000 jobs or 2 percent of the workforce), more than four in ten businesses (44 percent) expect no jobs at all to become obsolete and across all industries new hires outweigh any losses. Aggregated across the economy, the number of employees companies anticipate hiring as a result of digital investments is 1.1 million, suggesting a net creation of 800,000 jobs. When it comes to growth, if all UK companies could access the best digital capabilities available, the economy could be boosted by a further £92 billion per year, equivalent to 2.5 percent of GDP.

Opportunities across all industries and regions

Opportunities to realise this potential are spread across all industries. The Digital Opportunity is greatest for professional and tech services firms, who could add £27 billion a year in industry revenues. Lesser but still significant gains are possible for other sectors such as wholesale and retail (£17 billion a year), manufacturing (£9 billion a year), financial services (£9 billion a year) and transportation and storage (£8 billion a year).

The potential gains are also spread geographically throughout the UK, and while the Digital Opportunity is greatest in London (a potential £48.5 billion boost), other regions are catching up. Scottish businesses could increase revenues by 3.6 percent (£10.7 billion), followed by Wales, the North-West and South-East, who could all see a 3.1 percent rise.

SMEs have the most to gain

Companies with fewer than 250 employees have the most to gain from investing in digital technologies, with SMEs expecting an additional £56 billion boost if they had access to the best digital capabilities available.

The report finds that SMEs are in a strong position to catch up with larger companies, despite having fewer resources. Building up their capabilities is a priority, with plans to increase employment by 6 percent over the next two years to make the most of digital opportunities; three times the rate of larger companies.

Digital Leaders show the way

The report defines Digital Leaders as those firms who are prioritising investment in a broad range of digital capabilities: technology infrastructure, digital workforce, digital information, digital strategy and leadership, open and collaborative partnerships and digital customer engagement.

While on average Digital Leaders don’t spend any more money on technology than other firms, they spend it more wisely and achieve better results. These leaders report improved financial performance as a result of digital investments, including a 5.3 percent improvement in revenues and a 5.5 percent reduction in costs – figures which are 30 percent higher than other firms.