Internet business adds billions to the e

Internet business adds billions to the economy – Internet business is worth £100 billion to the UK economy, a new study has estimated.

That makes online trading a more substantial component of economy than transport or the utilities, and the equivalent of 7.2 per cent of GDP.

According to the research, which was conducted by the Boston Consulting Group and entitled The Connected Kingdom: How the Internet is Transforming the UK Economy, Britain is the largest exporter of e-commerce goods in the world.

The study was commissioned by Google, the US search engine business.

The £100 billion contribution to the economy recorded by e-commerce in 2009 comprised 60 per cent from online shopping (including the cost of connections as well as actual purchases) and 40 per cent from investment in internet infrastructure, IT expenditure and net exports.

Internet firms in the UK employ some 250,000 people, while the UK itself is, on a per capita basis, the world’s foremost e-commerce market.

As well as an engine of domestic consumption – 31 million Britons have bought goods or services online during the past year – the internet is good for the UK’s trade balance. For every £1 spent on importing goods online, some £2.80 was spent on goods or services that were exported to overseas markets.

There was good news in the study for firms that have chosen to enhance their online presence. Those that have pushed their online trading capacity saw sales climb by an average of 4.1 per cent a year over the past three years. Those that eschewed online commerce enjoyed growth of as little as 0.5 per cent in the same period.

Online business looks all set to grow yet further. The report calculates that the value to the economy brought by the internet could rise by between 15 per cent and 20 per cent in the years to 2015 when it would hit 10 per cent of GDP.

Paul Zwillenberg, a partner at BCG in London, said that, in the context of the recession, the figures were surprising: “We were not expecting the value to be so high. It became clear very quickly that the internet had become as crucial as electricity to people and businesses in the UK.”

Mr Zwillenberg added: “The internet will be an important engine for job creation. This should give us confidence that Britain can compete on the world stage.

“This shows that the UK is now a nation of digital shopkeepers. The UK was very early in embracing the internet. The survey also demonstrated the entrepreneurship of Britain’s small- to medium-sized enterprises. Several industries – including media, travel, insurance and fashion – are being transformed by it.”

Matt Brittin, managing director of Google UK, commented: “The internet is a central pillar of the UK’s economy.

“The sector has come of age, and with great prospects for further growth the UK internet economy will be vital to the UK’s future prosperity.”

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