Tech City is spreading outside of London as number of technology businesses increases, report finds

The first ever Tech Nation report reveals there are over 47,000 digital technology companies in the UK

London remains by far the biggest digital employer, according to the report, with 251,590 people working for technology companies in the capital (Getty)

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 almost three quarters of digital tech businesses are based outside of the capital.

The first ever Tech Nation report reveals there are over 47,000 digital technology companies in the UK, with 74 per cent of those based outside of London. Half of the total, which don’t include sole traders, have been set up since the recession, with a digital technology companies accounting for 15% of all new companies founded since 2008.

Gerard Grech, chief executive of Government-backed TechCityUK, which carried out the report, 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 and investment into the cluster of start-ups found in the capital. TechCityUK was initially set up in 2010 to promote and foster the group of technology companies based around East London, but has since had its remit extended to across the country.

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 the digital businesses, followed by 56,145 technology workers in Manchester. 1.46m people work in the digital economy across the UK, roughly 7.5 per cent of the total workforce.

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

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."