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The internet accounts for 7.2% of UK GDP

This is the finding of a report by the Boston Consulting Group (BCG) on behalf of Google. They maintain that the internet is worth £100bn a year to the UK and this does not include the £360bn a year business-to-business market.

The report says that if the internet was a sector of the economy it would be the fifth largest sector in the UK, above construction, transport or utilities. Online shopping accounts for about half the £100bn mentioned, and compares with consumer expenditure online in 2001 of only £2bn. In fact, UK consumers spend a higher proportion of their money online than any other country in the OECD.

The internet is worth £100bn a year to the UK economy.

 

The report forecasts that by 2015 the internet will be contributing between 10% and 13% of GDP. According to Paul Zwillenberg, a partner at BCG: “The internet is pervasive to the UK economy, more so than in most other countries.”

In fact, the UK is the world’s leading nation for e-commerce. It’s nice to know that we still lead in something. The report shows that for every £1 spent online in the UK to import goods, no less than £2.80 is exported, which is “the opposite of the trend seen in the offline economy, which exports 90p for every £1 imported.” There are also an estimated quarter of a million people employed in internet companies.

Zwillenberg added: “Everyone thinks the global Silicon-Valley-based companies are driving growth, but this report makes clear that in the UK it is coming from the ‘mom and pop’ businesses. They now have global footprints, they are selling to the ‘long tail’ and making their businesses more efficient.”

The concept of the ‘long tail’ refers to the fact that internet based firms no longer have to sell large quantities of goods to a small number of customers. They are now able to sell online in very small quantities to large numbers of people around the world.

In the UK about 62% of adults, amounting to 31 million people, bought products online this year. In 2009 those of us purchasing on the internet spent an average of £1600 each.

Small businesses that are geared up to internet selling are now reporting four times greater growth than companies who are less active in this form of selling. The UK is now “a national of digital shopkeepers.”

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Posted in Consumer Expenditure, Internet

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