Closing the regional digital divide could add £4.8bn to the UK economy

Bridging the gap between UK nations and regions when it comes to digital skills, infrastructure and performance could contribute £4.8bn to the economy, new research reveals.

The report by trade association TechUK said there have been improvements to the UK's digital ecosystems but strong differences remain across the UK.

The study measured regional gross value added (GVA), which revealed that London's digital sector GVA leads the way at £9,083 per person, followed by the South East at £5,287.

In contrast, West Midlands scored £2,055 per person, Scotland recorded £1,979, and Wales £1,348.

TechUK said the extra £4.8bn could be added to the economy if the six regions with the lowest digital GVA - South West, East Midlands, Yorkshire and the Humber, North East, Northern Ireland, and Wales - reached the UK median.

Local Digital Index

TechUK said there have been improvements in digital infrastructure with better broadband speeds and expanded mobile coverage. It highlighted the West Midlands which ranks second nationally through good 5G connectivity to over 80% of homes and gigabit broadband to over 73% of premises.

On digital adoption, the report showed a mixed picture with declining business counts and varying regional digital employment shares everywhere in the UK except Yorkshire and The Humber.

The index noted that the number of businesses defined as operating in the 'digital sector' has fallen across the UK since 2022. The drop in London alone is 2,745, a 12% fall, which is more than the entire number of digital businesses in Northern Ireland.

Research and innovation spending is rising across the UK, TechUK said, but there are stark differences.

It found that the South East leads the way on reseaech and development spend with spending rising by £6,060m since last year. This is almost as much as the figure for the entire North West of England’s figure (£6,533m). Similarly, total spend in London, the South East and East of England (£34,554m) compares to only £11,165m in the North of England.

Exports of goods and services is also up in every region, but again regional disparities remain. For example, the gap in service exports between London and the North West of England has increased since 2022 by £1,608m.

Recommendations for boosting digital growth

TechUK made several recommendations to boost digital growth and close the regional gaps.

Among the suggestions were modernising the National Curriculum to ensure digital literacy, digital skills, and digital ethics education are cross-curricular and integrated throughout primary and secondary education.

It also called for more start-up and growth support for businesses, including making the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes permanent as well as reforming the Seed Enterprise Investment Scheme (SEIS) by raising the cap for both investors and start-ups. 

Enterprise Nation has also called for the investment schemes to be made permanent in its submission ahead of the government's Autumn Statement on 22 November.

TechUK said funding should be provided to digital inclusion projects across the UK, alongside a new digital growth fund to support small businesses in adopting digital technologies. 

Introducing Enterprise Nation's Tech Hub

The TechUK report comes as Enterprise Nation this week launched the new Tech Hub, a free online tool providing recommendations and resources to help small businesses adopt new technology.

Tech Hub includes a diagnostic tool that asks founders questions about their business, their confidence with technology and what they are looking for. The tool then delivers a series of recommended solutions.

Business owners can also access training on how to implement digital tools, and how such solutions can be a catalyst for growth.

Emma Jones CBE, founder and CEO of Enterprise Nation, said:

"We're falling behind. But we can change this. The UK has the experience and the expertise to lead the world in building a digital one-stop-shop that can revolutionise tech adoption.

"Tech Hub is backed by experts and is the merging of brilliant minds which all understand that failing to tackle the UK's poor digital performance now is simply storing up problems for years, and possibly decades to come.

"If entrepreneurs don't know where to turn for accessible, pragmatic digital advice on, say, artificial intelligence or time-management tools, how can we expect to see the improvement in productivity we need so that the UK can compete on a global scale?

"By bringing this idea to life now, we hope Tech Hub can unlock new ambition and maximise possibilities while minimising risk."

About Tech Hub

Backed by top technology firms, Tech Hub is a new-generation, one-stop-shop solution that allows businesses to access industry-leading digital tools, training, support, and know-how to succeed, all in one place. Take me to the hub