Already at 8 Percent Of GDP, the UK’s online spending will reach £225 billion by 2016
More than eight percent of the UK’s economy comes from online commerce, making Britain the most reliant economy on Internet spending, a report has found.
The Internet pumped £121 billion into the UK economy in 2010, placing it above the construction, healthcare and education sectors to be ranked as the country’s fifth largest industry, according to a study by researchers at the Boston Consulting Group (BCG). At 8.3 percent of GDP, Britain’s Internet contribution was the largest of any G20 country, and was more than double the average of 4.1 percent.
UK leads the online pack
The BCG’s findings paint the UK as the most promising online economy of the world’s leading nations. South Korea was the only comparable country to the UK in 2010 with 7.3 percent of GDP coming from the internet. China and the United States were above average, with the internet accounting for 5.5 and 4.7 percent of their GDPs respectively.
By 2016, the gap between the UK and the rest of the G20 is expected to become a chasm. BCG estimates that the internet’s economic value in Britain will hit £225 billion by 2016 and it will be worth 12.6 percent of national GDP. South Korea, China and the US, meanwhile, are only predicted to experience modest growth of 0.7, 1.4 and 0.7 percent respectively. The total online economy of the G20 will be worth $4.2 trillion (£2.6tr) by 2016, BCG predicts.
The report highlights the impact of the internet in everyday life by noting that in the UK, online advertising expenditure overtook all other media, including television, in 2011. In four years, advertising spend for the medium will be $8.4 billion (£5.3bn). Additionally, the internet will then account for 23 percent of all retail transactions.
As well as covering the burgeoning role of the internet for the economy, the BCG’s study looked at the value of the medium at a personal level. It revealed that if a regular habit needed to be sacrificed for online access, 91 percent would give up fast food, 78 percent would drop chocolate, 25 percent would quit sex and a worrying 17 percent would stop taking showers.
Additionally, a WorldPay eCommerce Basket survey of 2,000 shoppers revealed that Britons spent an average of £3,370 online last year, with 40 percent saying they shopped on the internet at least four times a month.
“Every day we hear reports that consumer belts are tightening due to the current economic conditions, but eCommerce continues to grow at a healthy rate, particularly in the UK,” said WorldPay’s head of eCommerce products, Gabriel Hopkins. “The results from the Boston Consulting Group supports our recent research that customers are spending vast amounts online, and use online channels to regularly purchase anything from fruit to fashion. From a payments perspective, mobile is a key growth area for internet spending. UK consumers are predicted to be the biggest mobile shoppers in Europe in 2012, and have been for a couple of years already.”
Some commentators sounded a note of caution, warning that growth in the UK’s Internet sector would require decent connectivity: “This report clearly shows the UK is in a healthy position when it comes to the internet-based economy,” said Michael Allen, of Compuware. “However, the report also points to the need for the UK to continue increasing average internet speeds. This note of caution is really about performance; if speeds are poor, the user experience will be poor, which in turn will stunt the growth of the internet economy. It’s key that everyone involved from retailers to ISPs pay close attention to this area and ensure that consumers’ expectations around the experience of using the internet are met, otherwise the UK will find it hard to maintain its leadership position.”