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October 20, 2015

Going digital could boost UK economy by £92 billion

News: SME's have most to gain from the UK's digital potential.

By Ellie Burns

Digital technologies could provide an annual £92 billion boost to the UK economy, equivalent to 2.5% of GDP, in addition to creating over a million new jobs across all industries over the next two years.

The adoption of digital has already impacted businesses and the UK economy, with UK companies stating that digital tech has fuelled a 4.4% rise in revenues and reduced costs by 4.3% in the past year alone. This generated an estimated £124 billon contribution to the UK economy.

It is, however, not all good news. In the next two years digital technology is expected to result in job losses, with the predicted number of losses standing at 2% of the workforce, or around 300,000 jobs.

44% of businesses, however, expect no jobs to become obsolete with new hires across all industries expected to outweigh any losses. With an anticipated 1.1 million employees expected to be hired, the numbers suggest a net creation of 800,000 jobs in the next two years.

The Virgin Media Business report, ”The UK’s £92 billion Digital Opportunity’, identified professional and tech firms as the industries which could gain the most from digital, with those sectors potentially adding £27 billion a year in industry revenues.

Geographically, it came as no surprise that London was named as the place with the biggest digital opportunity, with the capital potentially eyeing a £48.5 billion boost. Wales, the North-West and South-East are all expected to see a 3.1% rise in revenues.

While tech firms and London were named digital winners, the report specifically shone a light on how SMEs have the most to gain from digital opportunities. SME’s could pocket an extra £56 billion if they had access to the best digital capabilities.

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Digital Economy Minister Ed Vaizey MP said: "The significant digital opportunity for businesses of all types and the economy as a whole is one that we can’t ignore.

"Government will continue working alongside companies like Virgin Media to transform the UK’s digital capabilities and laying the foundations for a thriving, digitally-led future."

Although the majority welcomed the Virgin Media and Oxford Economics report, Nick Hargreaves, co-founder of Cloud Employee, pointed out that the digital opportunities highlighted in the survey might be difficult to achieve due to the ever-widening skills gap. He said:

"Many businesses are concerned that they can’t get workers with the right digital skills and 46% of respondents want better training in universities.

"However, this is a medium- to long-term play – many businesses need these skilled workers right now, or it’ll be too late.

"Recent policy changes from the government to make it easier to bring in tech talent from outside of the EU will also help, but again it may take time for this to take effect. And it isn’t just a handful of small businesses that have positions to fill – it’s thousands."

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