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UK businesses have to embrace digital innovation and skills, which could add £34bn to the UK economy by 2030, according to Confederation of British Industry (CBI) president Brian McBride.
Speaking at the CBI conference in Birmingham yesterday (21 November), McBride described the UK as a “magnet for tech investment”, second only to the US globally.
“Startups and scaleups are the keystone of the UK tech sector, which is now valued at over $1tn and employs more than 1.6 million people,” he said. “So, supercharging their success is one of the clearest ways of powering ahead.
“In the US, they are already creating a new generation – ‘decacorns’, businesses that scale to $10bn in value. But at the CBI, we believe the UK can step up and match that. We want to knock down the blockers holding them back and find smart solutions to boost their success.”
With a huge labour and skills shortage in the UK, and businesses struggling to find the people and skills they need, businesses need to adapt to the “reality that we won’t be able to rely on employment growth for economic growth”, said McBride.
“Firms will need to find other ways to drive productivity – and that’s where tech adoption comes in. Business tech adoption is a big economic booster. But despite an uptick during the pandemic, just one in five UK firms now have ‘high’ digital tech adoption compared to nearly two in five in the Netherlands and half of Danish firms. Closing that gap and getting more businesses tech-enabled promises big prizes.”
McBride added: “I don’t just want to talk about getting businesses participating in the future economy, though, but everyone in every part of the UK. And that’s about connectivity – one of the basics we need to get ahead – and that’s what we’re pushing the government on.”
Also giving a speech at the CBI conference, prime minister Rishi Sunak said the government wants to build a better country, get inflation down and grow the economy, and that “critical to achieving all this is innovation”.
Sunak said he wants the UK to be a country where a culture of innovation “permeates every aspect of what we do”, where it is at the heart of economic policy and at the heart of the government’s vision for public services.
He set out three ways to do this: harnessing innovation to drive economic growth, embedding innovation in public services, and ensuring people have the skills to become “great innovators”.
Sunak added: “Over the last 50 years, innovation was responsible for around half of the UK’s productivity increases. But the rate of increase has slowed significantly since the financial crisis. This difference explains almost all of our productivity gap with the United States.”
Read more about innovation and skills
- New study from KPMG shows businesses are keen to adopt new technologies to drive improvements to customer experience.
- Companies should look for candidates with the right skills potential, rather than insist they tick a hundred different security skills boxes.
- Venture capital fund managers speak to Computer Weekly about the importance of innovation clusters to the UK tech ecosystem, and the need to develop further investment opportunities outside the South East.
In its autumn statement last week (17 November), the government announced that it wants to bolster the UK’s science and technology sectors and drive innovation. It committed to increase spending on research and development (R&D) to £20bn a year by the middle of the decade, up by one-third on 2021-22. As part of this, Innovate UK programmes were handed £2.6bn across the Spending Review period.
However, the government will also press ahead with reform to R&D tax reliefs with a view to making sure public money is spent more effectively. Citing “significant error and fraud” in the SME tax relief scheme due to its “generosity”, the government said it is planning to look at how to rebalance the rates of the reliefs.
In his speech at the CBI conference, Sunak said that in challenging times, the government is making “difficult decisions on public spending”.
“In last week’s autumn statement, we protected the budget for research and development – £20bn, almost a fifth of our entire capital budget, the highest level of R&D this country has ever seen,” he said. “And we’re investing in high-risk, high-reward research with the new Advanced Research and Invention Agency.
“But more important than what government does is what you do. It’s private sector innovations that really drive growth. That’s why the autumn statement cut taxes to encourage larger companies to do more research and development. It’s why we’re going to allow businesses to claim R&D tax relief on pure maths and cloud computing. And it’s why we’re absolutely committed to using our new Brexit freedoms to create the most pro-innovation regulatory environment in the world in sectors like life sciences, financial services, artificial intelligence and data.
“But any credible strategy also needs to support fast-growing businesses – those firms disproportionately responsible for our future growth. Turning million-pound businesses into billion-pound businesses and turning billion-pound businesses into ten-billion-pound companies will create good, well-paying jobs for the British people.”
Sunak also said the government will create “one of the world’s most attractive visa regimes for entrepreneurs and highly skilled people” to get to grips with the UK’s skills shortage.