The UK's digital economy, which has made a home for itself in East London is driving the country’s economic growth, according to new research published today by a think tank.
The so-called flat white economy of media, internet and creative businesses is now the second largest business sector in the UK. It accounts for 8.7 per cent of GDP, according to calculations from the Centre of Economics and Business Research (CEBR).
CEBR president Douglas McWilliams, who coined the term by taking the name of young workers’ favourite coffee, returned to the organisation this year after taking a sabbatical following a drugs scandal.
The latest data will be contained in a revised and updated version of his book, The Flat White Economy.
The flat white sector is epitomised by London’s silicon roundabout, which continues to attract high numbers of tech start-ups.
Since 2012, the sector has overtaken the retail sector, finance and the wholesales sector.
Recent data indicates that over the past three years to 2015 about 40 per cent of the UK’s economic growth is attributable to the sector, McWilliams said.
McWilliams also noted the fact the sector had received very little attention from the government in last week’s budget.
“The law of unintended consequences may be working in the Chancellor’s favour. The sector has grown without much assistance from the government and seems likely to continue to do so,” McWilliams said.
“The Budget’s personal tax changes, particularly the rise in the threshold for the 40 per cent tax band, are likely to benefit those working in the Flat White Economy disproportionately.
“Crossrail 2 and changes to planning regulations to boost London’s housebuilding will also deal with two of the major handicaps to the sector – the high cost of housing and lack of transport in London.”