UK leads the world in commercial use of the internet

How important is the’ internet economy’ as a contributor to UK GDP? According to a study by the Boston Consulting Group, it contributes 8.3% of our GDP, which is a larger proportion than in any other of the G20 economies. The report’s author told the Today programme this morning that this was down to the UKs “great broadband infrastructure” and that British business has taken to the internet and is exporting around the world, “leading the world in e-commerce”. You can hear the interview with him here.

The “internet economy” was worth £121bn in 2010, which made it bigger than the healthcare, construction or education sectors. In retailing alone, 13.5% of all purchases were done over the internet in 2010, according to BCG, and this is projected to rise to 23% by 2016. One of the reasons is the very high spread of internet usage amongst about 90% of the population, which is higher than most of our competitor nations, and which by 2016 will mostly be via smartphones rather than computers.

I think one of the key points in the interview, which really provides a useful focus on the importance of investment by both government and business in high speed connections for all, is not only the importance of this for businesses, but also for cash-strapped consumers, whom BGC estimate have saved £1,000 per year with internet purchases - the power of the internet to overcome information failure and help to take imperfect markets closer to the perfect model?

You can find much more detail from the report in this article.