With over 2,700 survey responses, more than 1,000 data points and insights from more than 220 community partners across the UK, the 2017 Tech Nation report by Tech City UK paints the most comprehensive picture of the UK’s digital tech economy to date.
This annual report provides insight into the drivers of the UK’s digital sector, along with a closer look at individual growth hubs across the country. It features a wealth of data on the UK not only at a national level, but regional and city-by-city too.
To summarise, here are our key findings for the digital media and adtech sectors.
1. Brexit isn’t all bad.
While Brexit will bring challenges, it will bring opportunities too. Investment and talent are key drivers of growth in tech - and Tech Nation 2017 shows true solidity for the UK.
Between 2012 and 2016, the UK received nearly two and a half times more digital tech investment than any other European country, with £6.8bn of investment in 2016 alone. The talent is here too: the UK is home to eight of Europe’s top 20 universities. Going forward, the industry should focus on showing the UK as a welcoming place to study, with enough funding available for overseas students.
2. London is the tech capital of Europe.
The UK’s capital attracted £2.2bn in investments in 2016, around £1bn more than its closest competitors (Amsterdam and Paris). Over the past five years, investment in London’s digital tech scene has been higher than in Paris, Amsterdam and Berlin combined.
London is also home to four of Europe’s top 20 universities, has almost twice as many Github users as Berlin or Paris, hosts three times more Meetups than any other city in Europe and has the highest percentage growth of new digital tech businesses in the UK (up 42% in the last five years), showing its continued dominance at home and abroad.
3. Outside London, other areas are flourishing.
While London may be the tech capital of the UK, smaller cities continue to prosper. Dundee tops the charts for digital revenue growth between 2011 and 2015 (171%), while Newcastle and Belfast have seen their numbers of new digital tech businesses rise by 39% and 37% respectively in the same period.
The proportion of new businesses in the digital tech sector per city is also illuminating. Sunderland leads the way with a figure of 19.3%, while Bournemouth & Poole are home to the highest concentration of high-growth digital tech businesses, at 26%.
4. Talent matters.
Six percent of all UK employees now work in the digital tech sector, with statistics showing these workers adding significant value to the UK’s economy.
Gross value added (GVA) calculations take the value of goods/services produced and subtract their production costs, gauging the true contribution of individual sectors to the overall economy. Calculations published in Tech Nation 2017 give UK digital tech workers a GVA of £103,000, compared with £50,000 for a non-digital tech worker, and the gap is widening. As a result, the salary gap between digital tech roles and non-digital tech roles is widening - but survey results show that sourcing highly skilled employees is a challenge.
5. An optimistic outlook.
Despite Brexit and a requirement for a greater number of skilled digital tech workers, the majority of respondents in Tech Nation 2017 are positive about the digital tech economy in their region. Just over half of all respondents said that their local digital tech economy was “strong”, rising to around nine in ten people for Brighton, Bournemouth/Poole, and Bristol/Bath.
When asked about future potential for growth in their region, over three-quarters of respondents gave an outlook of “good”, with just eight percent saying “poor”. The most optimistic responses came from Cambridge, Brighton, Leeds and Edinburgh - four cities that could be ones to watch in coming years.
6. Growth in digital tech is faster than the economy as a whole.
In 2015, the digital tech sector in the UK grew 50% faster than the economy as a whole: 4.8% growth compared with 3.2%. Digital tech turned over £170bn in total in 2015 - a 22% increase over the last five years - and contributed £97bn to the UK economy in 2015 (a 30% five-year increase, up from £74bn in 2011). The sector is propelling the UK forward, with a strong present - and the potential for an even stronger future.
7. The UK attracts fantastic global talent.
While 55% of those surveyed for this year’s Tech Nation report stated that “skilled talent supply” was the key challenge that their business faced, the UK’s digital tech scene clearly attracts plenty of talent from overseas. 13% of the nation’s digital tech roles are currently filled by international employees - a figure that rises to 31% in London and the South East.
It is vital that the UK continues to be able to attract top tech talent from across the globe, with continued schemes such as the Tech Nation Visa making this more achievable.
8. Improvements in digital infrastructure are needed.
If the digital technology sector is to continue to grow and flourish, further investment is needed in infrastructure. 28% of those surveyed for the report cited poor digital infrastructure as a key business challenge - a figure that rose to 55% in Glasgow, 45% in Dundee, and 42% in Brighton and Norwich. These figures are surprisingly high for large cities, with the report suggesting increased urban access to Ultra Fast Fibre as one part of the solution.
The Government’s £1bn Digital Infrastructure Fund should prove beneficial to some areas, along with the promises from UK ISPs of increased FTTP coverage over the coming years.
Overall, Tech Nation 2017 paints a picture of a thriving and quickly accelerating digital industry throughout the UK. The mood is upbeat, the statistics show strong growth, and the nation has firmly cemented its place as a top digital tech hub.
To read Tech Nation 2017 in full, click here.