Investment in digital technology is set to inject £232bn (6.9%) in GDP to the UK economy by 2040, a new study by Virgin Media Business and the Centre for Economics and Business Research (CEBR) has revealed.
Examining the ways in which digital industries can assist in the nation’s economic recovery from COVID-19, the study found that in 2025, technology investment will boost the economy by a hefty £74bn.
Come the end of the decade, notes the report, sustained digital investment will contribute an additional £127bn (4.4%), leading to a surplus of £232bn in just under two decades – an economic boost of similar magnitude to the current GDP of Finland or South Africa.
The study also notes that, despite the rapid shift towards digital, primarily driven by the pandemic, businesses across the UK (and the world) can still capitalise on major digital opportunities.
The adoption of digital processes across the public sector, for example, will create efficiency gains and thus, cost savings, which can then be invested in improved services and infrastructure – potentially worth an additional £75bn in GDP by 2040.
Furthermore, investments in digital health and social care could be worth £33bn alone, while digitising justice, central and local government systems could inject an extra £32bn to the UK economy.
The CEBR’s evaluation notes that, by 2040, digital investment could be worth an additional £40bn to the retail, professional services and construction sectors, with other industries also experiencing significant future gains.
“Focusing on the economic implications however, history shows us that periods of economic hardship can help to catalyse technological progress and adoption, as businesses and other stakeholders seek to adapt to new realities” – Cristian Niculescu-Marcu, director of economic analysis, CEBR
On top of this, the study notes how COVID-inspired digital transformation could lead to increased employee productivity; desk research, validated by expert interviews, for example, highlights a productivity growth assumption of almost 12% for employees who have capitalised on the digital opportunities arising from the ongoing pandemic. This, the report notes, is substantively responsible for the surge of 4.8% across the retail, professional service and construction sectors by 2040, driven by sustained growth in flexible working, digital services delivery, and the provision of richer data sets for AI (artificial intelligence) and analytics.
On these pre-emptive findings, Cristian Niculescu-Marcu, director of economic analysis at the CEBR, commented: “The COVID challenges facing the UK and the entire world are extremely serious. The economic impacts alone fall far short of capturing the scale of the pandemic’s toll on people’s lives and wellbeing. Focusing on the economic implications however, history shows us that periods of economic hardship can help to catalyse technological progress and adoption, as businesses and other stakeholders seek to adapt to new realities. Within this research we have examined the potential economic impact of a wave of digital transformation, driven by the rollout of new ways of working and connecting. This could create an economic high road over the coming decades, helping the UK economy to grow while also having the flexibility to deal with future challenges.”