Can the UK become the
- 26 March 2012
A recent report by the Boston Consulting Group suggested that the ‘Internet Economy' was already a significant contributor to UK GDP: "The internet economy was worth £121bn in 2010, more than £2,000 per person, researchers at the Boston Consulting Group (BCG) said. That made it bigger than the healthcare, construction or education sectors. The UK also carries out far more retail online than any other major economy."
The recent retail sales figures from the Office of National Statistics supported this trend, showing that 10.7% of retail sales are now transacted online.
Damian Collins points out on his blog for the Huffington Post that the UK already has a number of successful technology ventures: "We should have an ambition for a Silicon Valley in Britain based around and extending out of Tech City. The support of the government for this has helped to persuade companies like Google to invest in creative and digital infrastructure in the UK, rather than in other European countries.
He points out that a combination of public/private partnership has been behind the establishment of successful new creative hubs like Media City and the Sharp Project in Manchester, and the Custard Factory and Fazeley Studios in Birmingham, adding: "Even in the USA, it was work from the navy, NASA and the support of Stanford University that helped create the research centres that led to modern Silicon Valley."
However, Emma Barnett in the Telegraph argues that the recent initiatives are unlikely to be enough in themselves. She points out that Silicon Valley was built up in the coffee bars of Stanford University, rather than through Government-backed schemes. She believes that Michael Gove's promise to reform the ‘harmful and dull' technology teaching in schools may yield far greater results.
Community commenter sameerpatel agreed: "In addition Silicon Valley benefits from attracting much of the best and brightest technology talent from around the world, well-funded higher education establishments (in addition to Stanford) carrying out excellent research and attracting the best professors globally and a vibrant community of visionary venture capitalists willing to take risks on early stage ventures."
The UK is certainly missing one or two of these factors. A lack of funding, for example, may continue to halt progress. Kate Craig-Wood, managing director of hosting company Memset says that SMEs continue to suffer from lack of funding: "It (is) not start-ups that needed support so much as successful small to mid-sized companies that are finding it difficult to get investment. "I don't think the issue is starting businesses, but around middle-growth businesses with a proven model. More should be done to help them if the government wants IT to be an engine of growth," she said.
In the same piece technology adviser Peter Chadha suggested that the Government had missed a trick in not providing incentives specifically for cloud technology: "There's a seismic change going on in IT, which is the cloud. We need to push the cloud agenda to make the UK a hub of cloud technology. Geographically we are ideally placed to attract global electronic business."
In the meantime, the Department of Culture, Media and Sport has been handed the broadband rollout. Its stated ambition is to deliver the ‘best superfast broadband network in Europe by 2015', reaching 90% of premises in the UK. Sceptics can track its progress on the website through its broadband map of the UK.
Chancellor Osborne's ambition is certainly bold, but it is not unrealistic. The UK already has some tailwinds in establishing itself as a technology hub. The budget measures are unlikely to be enough in themselves and will need to be accompanied by reforms in education and better access to funding for SMEs, but there are plans in place to address these obstacles.
More from Mindful Money:
To receive our free email newsletter sign up here.
- Pensioners saving a staggering £48.7bn a year but could hurt the UK economy if the money sits in cash accounts
- UK banks pass stress test
- Will there be a Santa rally this year? The stats say December is the kindest month for investors
- How to become a more self-aware investor
- Where to find the top Help to Buy Isas
- Value or 'value trap' in the world's unloved sectors
- UK pensions are 'embarrassingly low' and among the worst in the developed world
- The stocks to watch this Christmas
- China's currency attains global reserve status from IMF. Inflows of $600bn predicted in five years
- It is Europe not China that is seeking "currency depreciation to stimulate the economy"