Britain has the world’s largest internet economy, worth £100bn a year, with internet revenue making up 7.2% of gross domestic product (GDP), new research has found.
The study, commissioned by Google, revealed that the majority of the £100bn contribution is being driven by small and medium sized enterprises alongside larger businesses, across all industries in the UK.
For every £1 spent online to import goods, £2.80 is exported helping to make Britain the world's leading nation for e-commerce. Furthermore, a quarter of a million workers are employed by internet companies, with small businesses that have a strong online presence likely to report almost four times more growth than those that don't.
Ben White, co-founder of Notion Capital, a venture fund and advisory firm, said: “That the internet industry has overtaken construction, education and transport as a percentage of UK GDP is yet more compelling evidence that the government needs to dedicate investment in the internet and related services.”
Around 60% of the £100bn is due to internet consumption, with the remainder of the money generated from the UK's internet infrastructure, government IT spending and net exports.
One reason for the increase in e-commerce is because many people research products online and then buy them offline, saving about £18bn a year, say researchers.
According to the Boston Consultancy report, as the British economy faces further uncertainty, internet companies will be at the heart of future recovery.
Analysts have also predicted that the amount by which the internet contributes to GDP will increase by 10% each year and will make up 10% of GDP by 2015, as internet consumption increases.
Matt Brittin, managing director of Google UK, said: "The UK internet economy will be vital to the UK's future prosperity."
© Crimson Business. Ltd .2010