The UK internet economy is the largest of the G-20 countries as percentage of GDP, with the UK expecting to hold on to this leading position in 2016, research by The Boston Consulting Group shows. In the past 10 years, internet usage in the G-20 countries has grown rapidly, with the biggest increase in users seen in developing G-20 countries. Consumption is a big driver of internet GDP with online retail representing an increasing portion of G-20 GDP.
The Boston Consulting Group (BCG) recently released a report on the internet economy in the G-20*, in which it provides national snapshots of the economic impact of the internet in the G-20 countries and highlights the largest digital economies of the G-20.
In the past 10 years, the number of internet users in the G-20 grew from 746 million in 2005 to 2,062 million in 2015, with number of users in developing countries specifically growing rapidly, now making up the majority of the total users. Most users now connect to the internet via their mobile devices, 2,134 of the total 2,707 connections.
Biggest digital economies
BCG expects the internet economy of the G-20 to reach $4.2 trillion by 2016, representing 5.3% of total GDP, up from 4.1% in 2010. The UK internet economy is expected to remain the largest, at 12.4% of GDP, followed by South Korea (at 8%), China (6.9%) and the EU-27 (5.7%).
Snapshot of the UK
In the past years, the UK internet economy has grown strongly from 8.3% of GDP in 2010 to 10% in 2015, with an expectancy to grow to 12.4% in 2016, almost doubling its size from $187 billion in 2010 to $347 billion in 2016. Internet as a UK industry has now surpassed manufacturing and retail, representing the second-biggest economic contributor behind the property sector.
Commenting on the results, Paul Zwillenberg, a BCG Partner and Digital Economy Expert, says: “Among G-20 countries, the UK’s digital economy is the largest as a proportion of GDP, and we expect the UK to retain its position. The Internet economy in the UK, which includes online retailing, sales of Internet-related devices, IT and telecommunications investments, and Internet-related government spending, is expected to grow to more than £200 billion over the life of the next government and to double in size from 2010.”
Consumption is the largest driver of internet GDP in most developed G-20 countries, with online retail representing a big and increasing share in many of the countries. The UK is again found on top, with online retail expected to account for 23% of total retail in 2016, followed by Germany (at 11.7%), Australia (8.9%) and South Korea (8.1%).
Zwillenberg adds: “The Internet is the fastest-growing component of the economy in the developed and developing markets of the G-20. It creates jobs across many industries, from software and app developers to people who fix broken iPad screens, and everything in between. A digitally informed Twenty-First Century Industrial Strategy will help ensure that the UK remains at the forefront of the digital economy, attracting and retaining the jobs that come with it.”
* G-20 countries are France, Germany, Italy, the UK, the EU, the US, Australia, Canada, Japan, South Korea, Argentina, China, India, Indonesia, Mexico, Russia, Brazil, Saudi Arabia, South Africa and Turkey.