Investment in digital technology is set to increase UK GDP by £232bn (6.9%) in 2040, according to a major new study by Virgin Media Business and the Centre for Economics and Business Research (Cebr).
The research, which examines how more digital ways of working can support the UK’s economic recovery from Covid-19, found investment in technology could boost the economy by £74bn in 2025.
By the end of the decade, sustained digital investment is set to lift UK GDP by £127bn (4.4%) and by 2040 could add £232bn (6.9%) to the national economy – an economic boost of similar magnitude to the current GDP of Finland or South Africa.
Detailed sector analysis reveals that, despite the rapid shifts many businesses have already made in response to the Covid-19 pandemic, there is still a major digital opportunity for organisations right across the economy.
Digital processes in the public sector will create efficiency gains and cost-savings which, when invested in improved services and new infrastructure, could create a boost worth £75bn – and potentially more – to national GDP by 2040. Investments to digitalise health and social care could be worth £33bn alone, while transforming justice, central and local government could be worth a further £32bn to the national economy, according to the report.
According to Cebr’s analysis, the impact of digital investment could be worth an additional £40bn in 2040 to the retail, professional services and construction sectors, with other parts of the economy also set to experience significant gains.
The report also identifies how Covid-accelerated digital transformation could boost employee productivity. Desk research, validated with expert interviews, points to an almost 12% productivity growth assumption for those employees who can take full advantage of Covid-accelerated digital transformation.
This is substantively responsible for the economic uplift of 4.8% across the retail, professional service and construction sectors by 2040, driven by continued growth in flexible working, enabling the delivery of digital services and providing richer data sets for AI and analytics.
Peter Kelly, Managing Director of Virgin Media Business, said: “After the toughest of years, the UK has a £232bn opportunity ahead of it which we must now grasp with both hands. By continuing to invest in new digital ways of working, we can seize this moment and help UK businesses to bounce back better.
“Moves to accelerate digital adoption are driving extraordinary outcomes across private and public sector organisations, helping them to revolutionise how they work, deliver for customers, and provide vital services for our communities. Through investing in our digital future we will support new growth, drive the UK economy forward and help the country to rebound stronger.”
Cristian Niculescu-Marcu CFA, Director of Economic Analysis, Cebr, added: “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.”