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Bournemouth beats London as UK's fastest-growing digital economy
Bournemouth, Liverpool and Brighton have emerged as the UK's most exciting hotbeds of digital talent
Britain’s digital economy is booming outside London, with 74pc of digital firms now based beyond the capital, and Bournemouth, Liverpool and Brighton emerging as the industry’s runaway success stories.
In the landmark Tech Nation report, the largest ever study of the UK’s digital sector, inner London is ousted from its place at the heart of the industry.
Bournemouth, coming from a very low base, has become the UK’s fastest-growing city in the digital economy, with digital start-up incorporations rising 212pc between 2010 and 2013.
Liverpool has experienced the second-fastest growth in new digital companies, more than doubling its number of digital firms.
Between 2013 and 2014, Brighton’s incorporation rate drew level with London, with a 20pc increase in digital company formations. Take a look at the map below to find out each city's digital specialisms.
Even in financial terms, London fails to pack the punch it once did.
Manchester is the UK’s fastest-growing tech cluster by turnover, with revenues rising 74pc year-on-year. Belfast grew its digital turnover by 57pc and Sheffield by 47pc.
London is in fourth place, with revenues up 42pc.
South Wales also makes it into the top five, increasing turnover from digital industries by 28pc year-on-year, mainly through the success of its health technology, data management and analytics industries.
Some 15pc of all new company incorporations last year were digital technology start-ups.
The growth in this nascent sector is remarkable: 50pc of all the digital companies in the UK were launched after 2008, despite the challenge presented by the arrival of the greatest recession in living memory.
Their newness explains why 98pc are classified as small businesses.
The UK is currently home to more start-ups than ever before. Last year, more than 500,000 new companies were created, up from 484,224 the year before.
The economic impact of this cohort is set to accelerate now that trading conditions are more favourable. While just 56pc saw revenues rise last year, 90pc are expecting a sales surge in 2015.
The research - commissioned by Tech City, the Government-backed organisation charged with accelerating the growth of the UK digital economy - found that these new digital start-ups have helped drive the UK’s economic recovery.
Baroness Shields, the chair of Tech City UK and digital adviser to the Prime Minister, said the onus is now on the Government to make sure that policy supports these growing firms.
“12.4pc of our GDP is attributed to technology and digital business, that’s the highest in the G20,” she told The Telegraph. “We are the most digital nation in the world and it is important that government policy makes the most of this enormous potential.”
American Baroness Shields was appointed technology adviser to the Prime Minister last year and now holds dual citizenship
Today, 1.46m people – 7.5pc of the entire UK workforce – are employed in the digital industries and job growth in this sector is predicted to outperform every other by 2020.
London remains the most significant employer in the digital economy, accounting for more than 250,000 jobs, but jobs site Adzuna has calculated that there are currently 45,000 jobs being advertised within the digital economy. Of those, 62pc are based outside London as soaring property prices and transport costs push employees and small firms further outside the capital.
Bristol is now the second-largest technology employer after London, accounting for 61,653 jobs, Manchester is ranked third with 56,151 people employed. Reading is a surprise entrant in fourth place, due to the digitisation of its traditional telecommunication industry. One in five businesses in Reading is now a tech firm.
Software is by far the UK’s biggest digital industry, with 22pc of technology companies working in the space. Britain is also a world-leader in advertising. However, clusters are also become world beaters in niche sectors: Manchester is the UK’s centre for media and entertainment, while Cambridge is now a major player in electronics and components.
The digital industries do face significant challenges. Broadband was universally cited as a business priority, with all technology firms demanding faster services.
Limited access to skilled staff could also stymie growth, and many digital firms have clustered around universities to increase access to the potential employees.
New research commissioned by Barclays’ Technology, Media and Telecoms team has found that 21pc of UK high-growth technology firms struggle to find staff with the right digital skills; this was cited as the biggest skills shortage overall.
Bournemouth has relied heavily on the local university to provide skilled workers in the gaming and marketing industries in order to achieve its record digital growth.
Edinburgh University has become a key source of artificial intelligence engineers and machine learning experts, while Cambridge’s success as a cluster has relied heavily on applied research from various faculties at Cambridge University.
The regional differences have prompted Baroness Shields to call for bespoke support based on the needs of each location. “Access to finance varies widely between London and Leeds, we need to bridge that divide,” she said.
“Local Enterprise Partnerships will have a huge role to play. The Government has done a lot of work on a national basis but we need to look specifically at each region now and work out what they need.”
“This report is a stake in the ground to show where we are,” she added. “Bragging doesn’t come naturally to the British, but we really are the best in the world.”
Tech Nation was compiled using data from DueDil, Adzuna, Crunchbase, AngelList and F6s, and analysed 47,200 digital technology companies across the UK.