Research from Barclays shows that firms that sell their products or services mostly online have seen revenues grow by on average 11.4 per cent in the last three years, over 50 times faster than GDP growth of 0.2 per cent over the period.
The research shows that the expansion is being driven mainly by small and medium-sized firms. Most high-growth businesses have fewer than 100 employees, while average revenues are £8.9m. Almost a quarter of firms – 23 per cent – are based in London, despite the capital accounting for just one-eighth of the UK’s population.
Although the internet already accounts for a bigger percentage of GDP than any other major economy, David Cameron has made digital enterprise a key part of the government’s plans to stimulate the UK.
This includes committing £680m for rolling out faster broadband in cities and rural areas as well as creating a high-growth section of the London Stock Exchange. Cameron and the chancellor, George Osborne, have also sung the praises of the cluster of firms in East London’s so-called Silicon Roundabout area, where hundreds of young companies have sprung up.
Figures released today from Google, which opened its Campus hub for fostering technology startups just over a year ago, underline the growth that internet firms have seen. Google said that Campus now permanently houses 100 startups, with one in four already moving on to bigger facilities since the hub opened.
“Campus has exceeded all expectations in its first year,” Google’s UK boss Matt Brittin said. “The second you walk into the building, you can’t fail to feel the buzz and energy.”
However, Barclays’ research also pointed to the challenges facing technology firms. 60 per cent warned of increasing costs, and 43 per cent pointed to recruitment issues.