UK has 4th largest digital economy in the world
New analysis has found the UK Europe’s largest digital economy. Despite this growth, however, the US market is worth more than 10 times as much.
As the UK looks to recover from the multiple shocks of Brexit, Covid-19 and its accompanying recession, digital innovation will be at the heart of its future economic success. With the importance of digital technology having particularly become more important since the pandemic, businesses are currently scrambling to come out ahead of their competitors, when it comes to realising the potential of new technologies.
Amid this, new research from Strategy& suggests that the UK’s digital economy is already lightyears ahead of many of its closest rivals. Currently the countries with the largest digital economies are the US, on $771 billion, China, on $317 billion, and Japan, with $164 billion. However, while the UK is some distance from them – its digital economy is more than 10 times smaller than the US’ – there is evidence to suggest it is punching above its weight at the moment.
The UK’s digital economy is, for example, worth more than $20 billion more than South Korea – which has long been thought of as an Asian tech hub destined to rival Japan. Meanwhile, the UK is also ahead of any of its European counterparts – with nearest rival Germany seeing its own digital economy’s worth fall short of the UK’s by around $10 billion.
Strategy& determined these values by measuring each country according to 86 indicators, on five key fronts. This analysis saw the researchers evaluated the foundations, talent, innovation, adoption, and local production of the digital economies in some 109 countries.
CHART: US vs UK
According to those indicators, the UK is strong, but could still improve on a number of factors, if it is to make ground on the other market leaders. For example, while the rate of digital adoption among organisations in the UK is broadly keeping pace with that of US entities, there is a slim gap when it comes to nurturing digital talent – meaning that there is a smaller portion of the workforce in the UK which can help firms make the most of that adoption.
Meanwhile, the US’ digital foundations are far more advanced than the UK’s. This means that addressing this gap will be more difficult than it needs to be. If businesses and governments in the UK intend to better develop the digital economy, they must build adaptive regulatory frameworks, aggressively develop talent, expand innovation capacity, and increase local production of digital goods and services. At the same time, policymakers need to accelerate digital economy development – and act now to support digital disruptors in their early stages.
