News Release
PR Contact: Laura Parsons
020 7303 0885
lauparsons@deloitte.co.uk
London technology, media and telecoms sector creates £125bn a
year of economic value
•
The London technology, media and telecoms (TMT) sector’s contribution accounts
for 8% of UK GDP;
•
Financial community needs to further recognise the value of investment in TMT
companies;
•
The sector employs over 440,000 people in London*.
A report from Deloitte reveals that the London technology, media and telecoms (TMT)
sector generates an overall economic contribution of £125bn a year to London and the
rest of the UK**. This accounts for 8% of UK GDP.
To ensure London remains a global TMT hub, the Government and financial services
industry need to support the technology sector with adequate funding to develop
companies that can be globally successful. The sector also needs to drive collaboration
between businesses, universities and other institutions, and nurture talent that combines
creative and tech skills, to successfully innovate in the digital economy.
The report, London Enabling a World Leading Digital Hub, published alongside EMC, Intel
and London First, looks to develop a vision for London’s digital future and exploit its
economic contribution.
Overall economic contribution
London is the economic engine for the rest of the UK. The £26bn of direct economic
impact (Gross Value Added) generated from the London TMT sector, leads to an
additional £23bn of economic impact for London. London TMT activity also leads to
£77bn of economic impact for the rest of the UK through the London TMT sector’s
purchases and employee spending as well as through the enablement of other sectors
within the economy.
Other key findings are:
•
Half (46 per cent) of UK media jobs are in London;
•
The sector employs over 440,000 people in London;
•
One in ten jobs in London are in the TMT sector;
•
Over a quarter (28 per cent) of total TMT employment in the UK is in Greater
London;
•
TMT companies occupy 25 million sq ft of real estate in central London, 13 per
cent of office space.
Ed Vaizey, Minister for Culture, Communications and Creative Industries, said: “As this
report highlights, London stands out as a global leader in technology, media and
communication. This is why Government is investing in initiatives like the £16 million
Skills Investment Fund and the £150 million Superconnected Cities program, which will
equip our sectors for the future, and continue the valuable fusion of creative and
technology skills.”
Investment challenges to overcome
The report highlights how the UK financial sector could do more to support the
technology sector. It compares UK technology venture capital investment with the US.
The estimated value of technology venture capital investment in the UK is one tenth of
that in Silicon Valley, taking into account the relative sizes of the UK and US economies.
Organisations interviewed for this study indicated there is a funding gap for UK
technology businesses at the “growth” stage of between £500k and £4 million, following
the seed and start-up funding stages. The report calls for the funding gap to be filled and
for the financial community and entrepreneurs to step up to invest in and develop these
companies. In addition the financial services industry should explore options to sharpen
the skills to appraise investment opportunities in technology companies, perhaps by
building on examples such as the Silicon Valley bank which is importing these skills to
London.
Financial services companies should be encouraged to engage with technology risk and
take a longer term view of investments. The scope for addressing these challenges is
reflected in the average value UK technology deals which is lower in the case of UK
bidders (£40 million per deal on average in the last year) than in the US ( £160 million
per deal ) and the rest of the EU and Asia (both £110 million per deal).
Jolyon Barker, global lead for Deloitte's Technology, Media and Telecommunications
(TMT) industry said: “We need our financial sector to support the technology sector in
developing global players.
“London’s TMT sector is an economic engine for the UK. As Tech City attracts inward
investment and promotes exports, the wider UK business community should pursue a
common objective to lead globally in digital creative product development across media,
online games and apps, advertising and platforms, with London as the engine.
“The foundations of London’s digital potential are already in place. The London media
and creative industries are a hive of talent and inspiration, producing print, broadcast
and online content which are consumed and recognised globally.”
John Dickie, Director of Policy and Strategy, London First said: “It’s clear that the TMT
sector has potential to be of tremendous value to London and the UK economy but to
realise that we have to make sure the conditions are right for these new businesses to
establish themselves and grow. Some of the challenges they face are common to most
young business sectors but there are specific elements, such as access to talent and the
resilience of the city’s IT infrastructure, that are particularly pertinent. These need to be
addressed if the government is serious about making London the European rival to
Silicon Valley.”
James Petter, Vice President and Managing Director UK & Ireland, EMC, said: “The report
identifies the capital’s many advantages and considers where improvements can be
made. While London is well-placed to exploit its status, resources and diversity, there is
no guarantee it will achieve its ambitions and there are specific challenges around skills
and finance.
“To continue to drive our business, not only do we need technically literate talent to join
EMC from college and elsewhere, but also to keep refreshing the business right through
the management chain. London is a creative and financial hub that should be seizing its
natural competitive advantages. To do this, London needs industry and government to
work together to act on the findings of this report, and EMC will be delighted to play its
part.”
Martin Curley, VP and Director of Intel Labs Europe said: “The ambition set out in this
report is consistent with our initiative, Open Innovation 2.0, which seeks to promote a
new innovation model across Europe to create jobs and promote a sustainable economy,
by driving effective collaboration between industry, universities and customers,
stimulating entrepreneurship, and prioritising innovation that responds to market
demand.”
Ends
Note to editors
* Overall it supports over 650,000 jobs in London and nearly 600,000 jobs in the rest of
the UK including through supply chain purchasing and consumer spending effects.
** About half of this overall economic contribution stems from supply chain and
employee spending effects, while the other half results from the enhanced productivity
across the economy that the sector enables. Approximately forty per cent of the overall
economic contribution of the London TMT sector represents a benefit to the London
economy, while c. sixty per cent is economic value created in the rest of the UK.
About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is
among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited
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description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
For more information, please visit www.deloitte.co.uk.
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About London First
London First is a business membership organisation with the mission to make London
the best city in the world in which to do business.
About EMC
EMC is a registered trademark of EMC Corporation in the United States and other
countries. Other products and/or services are trademarks of their respective owners.