Start-ups have digital potential to boost economy by £56bn

The UK economy could receive a £56bn boost – equivalent to 1.5% GDP – if start-ups “fully harness the capabilities of available digital technologies”, research from Virgin Media Business has claimed.

Compiled by Oxford Economics, the study surveyed over 1,000 UK businesses about the impact of digital capabilities both at present and in the future.

It found that small and medium-sized businesses using digital technology have increased their revenues by 6.6% and reduced costs by 4.4% in the past 12 months, contributing an estimated £71bn to the economy.

The research also reported that, although the digitalisation of certain industries could result in a loss of around 180,000 jobs by 2017, expected job losses will be “far outweighed” by the number of employees small businesses anticipate hiring as a direct result of digital investment.

Ed Vaizey MP said of the research: “The significant digital opportunity for businesses of all types and the economy as a whole is one that we can’t ignore. Government will continue working […] to transform the UK’s digital capabilities and laying the foundations for a thriving, digitally-led future.”

Nick Hargreaves, co-founder of Cloud Employee, expanded on the findings:

“Many businesses are concerned that they can’t get workers with the right digital skills and 46% of respondents want better training in universities. However, this is a medium to long-term play – many businesses need these skilled workers right now, or it’ll be too late.

“Recent policy changes from the government to make it easier to bring in tech talent from outside of the EU will also help, but again it may take time for this to take effect. And it isn’t just a handful of small businesses that have positions to fill – it’s thousands.”