London and the South East of England now account for 55% of the UK’s tech economy, shows a study from BDO LLP, the business advisory firm. This is despite the fact that only 27% of the UK’s working-age population is based in the region.
The technology industry in London and the South East was worth £47 billion in Gross Value Added (GVA) in the most recent year, up from £37 billion five years ago. GVA measures an area’s contribution to the economy based on the value of the goods and services it produces in a particular industry.
Berkshire contributed £8 billion in GVA in 2017, placing its tech sector first out of 178 areas in the UK.
The next four highest areas were all in London – Camden & the City; Westminster; Tower Hamlets and Haringey & Islington, which together account for 19% of the UK tech sector’s GVA.
Tony Spillett, National Head of Technology and Media at BDO, says: “London and the South East continue to lead the way in the growth of the UK’s buoyant tech industry. Established multinationals, such as Google, Microsoft and Amazon have created tens of thousands of jobs, drawing top talent to the city.”
“London’s reputation as a hub of talent, innovation and creativity is a huge driving force behind the capital’s thriving technology industry. Fintech has been a high growth segment and London is seen as a global leader in this field.”
The rise of challenger lenders: London-based Koto seals £1.3M for UK debut, over 12M users can now get credit easily
Scottish, Welsh and Northern Irish tech industries lag behind the rest of the UK
While tech is booming in the South East, other parts of the UK aren’t experiencing the same levels of success. BDO says that Scotland and Northern Ireland’s technology industries are lagging behind the rest of the UK, as 15 of the bottom 20 areas with the lowest technology contribution to the UK economy in 2017 were based in the two countries.
These areas include the Shetland Islands, which ranks 177th out of 178 areas in the UK, and only contributed £6m to the UK economy from its technology industry in 2017, and Omagh, which ranks 169th and contributed £22m.
GVA for the technology sector in Wales grew by 43% during the five years covered by the study, however, this was from a low base and the country’s tech GVA was just £1.6 billion at year-end 2017.
BDO says there are some steps that could drive growth in the technology industry in Northern Ireland, Scotland and Wales. Increasing funding for STEM courses at universities, alongside ensuring universities and cities work closer together to retain graduates, will help to create local tech hubs.