UK tech sector growing at twice the rate of the wider economy
Gross Value Added (GVA) of UK techs worker now more than double that of non-digital workers at £103,000 compared to £50,000
Time to start a tech business? The UK’s technology sector is growing at twice the rate of the wider economy, with digital jobs rising by 17% between 2011 and 2015 compared to 8% for non-digital jobs, according to Tech City UK’s Tech Nation 2017 report.
The average advertised salary for digital and tech jobs now stands at £50,663 a year, compared to £35,155 for non-digital positions – a 44% difference.
Since 2012 there has been a 13% increase in the advertised salaries of tech jobs and only a 4% rise in those of non-digital job postings.
The UK’s digital economy is the largest in Europe, attracting more investment (£6.8bn) in 2016 than any other country on the continent, including France (£2.4bn) – its nearest rival – and Germany (£1.4bn) combined.
The picture over the last five years is similar: the UK’s tech sector secured more than £28bn between 2011 and 2016, compared to £11bn for France and £9.3bn in Germany.
While London has traditionally held a monopoly on tech investment, the report found that, for the first time ever, in 2016 there was more venture capital and private equity investment into companies outside the capital, accounting for 68% (£4.6bn) of all funding.
London is still home to the UK’s highest tech salaries, but other digital hubs such as Newcastle, Sheffield and Leeds have seen salaries jump by 25% over the last five years. Meanwhile, the number of tech businesses started in London is up 42% over the same period and has risen by 39% in Newcastle and 37% in Belfast.
London, Bournemouth & Poole and Newcastle are home to the highest concentrations of high growth digital businesses in the UK.
In terms of productivity, the Gross Value Added (GVA) of a tech worker in the UK is now more than twice that of a non-digital worker at £103,000 compared to £50,000. The last five years has witnessed a widening productivity gap between the two sectors from £48,000 to £53,000.
Based on its survey of 2,700 UK tech workers or investors, the report highlighted six areas of focus to ensure digital growth and innovation continues, including skilling up the nation to ensure employees can keep up with the rate of digital change, continuing to attract the “best and brightest” talent in light of Brexit and improving gender diversity.
Access to finance at every stage of growth was also highlighted as a priority, as well as better digital connectivity and the development of co-working spaces.
The government recently revealed a range of measures as part of its Digital Strategy that will make the UK the “best place in the world” to start and grow a business, including commitments to provide digital skills training and a £1bn funding package to improve digital connectivity.
Gerard Grech, CEO of Tech City UK, commented: “There are now significant tech hubs all over the UK, attracting both international investment and overseas talent.
“[…] These foundations will be crucial as we prepare to leave the EU. We need to maintain access to skilled workers while doubling down on home grown tech talent. And we need to think big. This report is all about working together on a common vision: the UK as a global leader in tech.”
Eileen Burbidge, partner at Passion Capital, said: “Tremendous momentum and results have been achieved in and by the UK’s tech community in recent years but we must continue to ensure that we have the best possible ecosystem in place to help the sector achieve its full potential.
“In addition, we must also commit to ensure that our young people have the skills and aptitude needed for a career in this industry that is having an impact on every part of UK life.”