Tech thrives in clusters as regions specialise

A surge in the number of technology businesses set up since the recession has helped the UK’s digital economy spread well beyond London’s so-called Tech City, with a new report revealing that almost three quarters of digital tech businesses are based outside the capital.

The first ever Tech Nation report reveals that there are more than 47,000 digital technology companies in the UK, with 74 per cent of those based outside London. Half of the total, which does not include sole traders, have been set up since the recession and account for 15 per cent of companies founded since 2008.

Gerard Grech, the chief executive of TechCityUK, which carried out the survey, said: “This is the UK’s first comprehensive analysis of what’s driving the digital economy around the country. Currently estimates are that the digital economy is around 10 per cent of GDP.”

The report found that the average turnover of digital technology companies was higher in Manchester, Belfast and Sheffield than in London, raising questions over the Government’s praise for and investment into the cluster of start-ups found in the capital.

London remains by far the biggest digital employer, according to the report, with 251,590 people working for technology companies in the capital. The next biggest cluster is Bristol and Bath, where 61,653 people work in digital businesses, followed by 56,145 in Manchester. Across the UK, 1.46 million people work in the digital economy.

Mr Grech said: “It’s very cluster-led and these clusters are standing out in different ways. If you look at London, it’s excelling at financial tech, Oxford its educational tech, Cambridge you’ve got - hardware and telecoms, Brighton you’ve got marketing technology - you’re seeing specialisms.”

The report defines digital tech companies as a subset of the technology industry as a whole, focusing on software, carrying out the majority of its business online or focusing on hardware, such as smartwatches, that is powered by software.

The Chancellor, George Osborne, said: “What’s so exciting about today’s Tech Nation report is that it shows how we’re seeing the growth of tech businesses right across the country. As part of our plan for a truly national - recovery we will do everything we can to support this growth and back the different tech clusters that are emerging around Britain.”