Aquent Aquent

Digital growth now a UK-wide phenomenon

Digital growth now a UK-wide phenomenon image
Digital growth now a UK-wide phenomenon

The announcement by George Osborne, in this month's pre-election budget, that the government is to invest £11m in new technology incubators in the northern cities of Manchester, Sheffield and Leeds, may not have hit the same headlines as his changes to national insurance or personal taxation. But, for the UK technology sector, the announcement was highly significant.

Osborne’s announcement effectively confirmed the government's acceptance that rapid technology business growth is no longer a phenomenon confined to east London - an area that the government itself branded Tech City back in 2010.

The UK-wide nature of the industry was supported by last month’s landmark Tech Nation research report from Tech City UK - the agency originally created by the government to promote the east London tech cluster but which now promotes tech business growth UK-wide.

Tech Nation said that nearly two in three UK digital jobs and three in four UK digital companies are now located outside of London. The report also identified 20 key technology business clusters outside London.

Perhaps most importantly, though, what Tech Nation did was to underline the importance of the tech business sector to the UK economy as a whole. Right now the digital economy accounts for 1.46 million jobs - or 7.5% of the UK workforce.

Using authoritative data from fast-rising digital businesses like Duedil and Adzuna, Tech Nation predicts that digital job growth will outperform all other occupation categories by 2020 - with digital employment itself set to grow by 5.4% by 2020.

The rapid growth in the country's digital economy offers us all an incredible opportunity. The UK is already leading the way in sectors like fintech and gaming, outstripping European and transatlantic nations. Hugely exciting UK-based startups like TransferWise, Powa and Just Eat are starting to demonstrate their potential with rapid growth.

Yet it also presents huge challenges for policymakers and economists. The key challenge among them all is how to bridge the skills gap that exists between the numbers of skilled developers coming out of our schools and universities and the numbers that industry itself needs.

This gap is to some extent being met by a highly mobile self-employed freelance developer workforce. But despite this great work, more will need to be done on the skills supply side, and soon, if we are to realise the potential of our national digital economy.

The skills shortage is arguably more acute in the clusters outside of London. Although the economies are small, and natives do return, the lure of London remains great for trained technologists.

Back at TechCityinsider, we've responded to the new national agenda by reinventing our three-year old TechCityinsider100 series as the TechNation200.

Our TechNation200 series for 2015 includes profiles of 200 people who are redefining digital business across the UK - and we are visiting every one of the 20 non-London tech clusters during 2015 to profile five businesses in each.

Our first city visit, to Brighton back in February, demonstrated that there are serious and rapid-rising digital businesses that are both serving the local economy with jobs and taking up the best tech talent from local universities. Companies like Brandwatch and Crunch are doing very well in Brighton, thank you, without the need to look up to London for help.

This is not to say that London no longer matters. Far from it: the London digital economy is by far and away the biggest of the 21 clusters identified by the Tech Nation report. What Tech Nation demonstrates is that when we talk about UK tech, we can no longer just say ‘London’.

This article was written for us by Julian Blake, editor of TechCityinsider.net.

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