Research commissioned by AWS and conducted by Strand Partners found that digital technology could add £520 billion to the UK economy by 2030. That’s on top of an already large industry of £177.2 billion, which is 6.8% of total UK gross value added (GVA).
For a country that’s patiently been waiting for post-Brexit growth stories, we may finally have one. This seems to be the most convincing one on offer, and it’s a rather large one, which is a double plus.
Where the Growth Is Coming From
The growth isn’t concentrated in one category. It’s spread across several digital businesses, with each category using its own strategies to scale.
Netflix, Disney+, and Apple TV+, for example, have spent billions of pounds on original productions. This has fragmented the space, resulting in users being required to subscribe to each individual service so they can watch all of the latest shows.
Online entertainment platforms have taken a different route. Their strategies focus on loyalty and retention. UK bingo sites are a good example of this. Rather than relying solely on expensive customer acquisitions, they’ve built loyalty programs to keep existing users engaged and retained, boosting their lifetime value (LTV).
E-commerce businesses have gone with personalization and logistics investment. ASOS, Ocado, and Next have all built recommendation engines that tailor product suggestions to individual users, while their fulfilment networks ensure nationwide next-day delivery (sometimes even same-day).
As you can see, there isn’t one industry, company, or strategy bringing in this “new” money to the economy. It’s lots of different sectors and businesses with wildly different strategies.
Why the UK Has Built This Advantage
A few factors have come together to make this happen.
First of all, the talent in the UK is like no other. There are millions of people supported by world-class universities in London, Manchester, Edinburgh, and Bristol. Each of the mentioned universities is producing a steady stream of engineers, designers, and product managers.
Then you have infrastructure. Fibre broadband coverage, mobile networks, and payment systems are all best-in-class here. This creates an unbelievable environment for any digital business looking to scale.
Adding to this, venture capital has continued to flow into UK tech companies at scale. The government’s Modern Industrial Strategy adds to this as well. They are applying significant R&D funding between now and 2030.
What This Means for the Wider Economy
The £520 billion is far from the ceiling. The UK offers the perfect environment for the tech sector to grow. Everything from the location to the people and investment opportunities all sit in the most ideal spot.
Everybody will benefit from this increase as well. Tech isn’t siloed like it once was. Every business, even businesses that have a slight online presence, will experience a part of this money that’s going to be injected into the UK economy.
This is a very exciting opportunity. Those who have businesses in SaaS or AI should be preparing for an exciting few years.