Could Britain lead the world in digital tech?
The UK is fifth in the world in digital tech exports, according to ITC data – ahead of much larger economies and countries but behind only the US, Germany, China, and India.
While finance has historically dominated the UK’s trade in services, digital tech was the fourth-biggest sector for services exports in 2019 and has been growing at a faster rate than finance, travel, and transport over the past five years.
Since the economic changes brought about by the COVID pandemic UK tech leaders have been changing their approach to commerce. The new normal calls for a truly international growth outlook.
The UK already punches above its weight for digital service exports. While it accounted for around 3 per cent of global GDP pre-pandemic, the UK facilitates 11.5 per cent of the world’s cross-border data flows.
There are upwards of 7,000 high-growth tech companies in the UK, many of which still have plenty of room to grow their export businesses. The UK exports far more digital tech services than it imports; in 2019, the UK had a 55 per cent trade surplus. That puts the UK in a better position than most of the world’s top 57 countries for digital tech exports, whose average trade surplus is 48 per cent.
What’s more, the digital tech trade surplus grew by 68% from 2015 to 2019, second only to the insurance and financial services sectors.
On the import side, the US is the biggest importer of digital tech services, followed by Germany and China, while the fastest-growing importers are India, Japan, and Brazil.
There are few better environments for scaling a digital tech business than the UK, where a large proportion of businesses are well established providing domestic tech services. The UK is third in the world and first in Europe for the number of tech unicorns.
In 2019, digital tech exports hit £23.3 billion. With the UK in such a powerful position, the government, industry leaders, and entrepreneurs should be looking to double digital tech exports by 2025.
If the UK can achieve that, the tech industry could be contributing an extra £23 billion to Britain’s economy by 2025 and move the UK even further towards the top of the rankings as a global leader in digital tech.
No other country across Europe has citizens using digital services more than the UK. A report by consulting firm McKinsey found 86 per cent of UK citizens have used e-commerce or online services in the past six months, growing the total number of digital users to 43 million. Except for groceries, digital became the preferred channel for most industries, the report claimed.
Early this year the UK Government unveiled its ‘Ten Tech Priorities’ that will form the foundation of the UK Digital Strategy. The Ten Tech Priorities are;
- Rolling out world-class digital infrastructure nationwide
- Unlocking the power of data
- Building a tech-savvy nation
- Keeping the UK safe and secure online
- Fuelling a new era of start-ups and scaleups
- Unleashing the transformational power of tech and AI
- Championing free and fair digital trade
- Leading the global conversation on tech
- Levelling up digital prosperity across the UK
- Using digital innovation to reach Net Zero
To assist the Digital Strategy, the UK Government is investing £5 billion in 5G and broadband networks.
The Government is also keen to foster innovation with industrial partners to establish the UK at the vanguard of the global digital tech sector. Other key announcements were the establishment of a new National Artificial Intelligence (AI) Strategy, planned to be unveiled later this year, which will focus on (i) growth of the economy through the widespread use of AI technologies; (ii) ethical, safe and trustworthy development of responsible AI; and (iii) resilience in the face of change through a focus on skills, talent and R&D.
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