Scottish tech sector lagging behind as London dominates

London and south-east England together account for 55 per cent of the UK tech economy, found BDO. Picture: Chris Jackson/Getty Images
London and south-east England together account for 55 per cent of the UK tech economy, found BDO. Picture: Chris Jackson/Getty Images
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Scotland’s technology sector is lagging behind the UK according to a report out today which highlights the dominance of London and the South East.

The report compiled by business advisory firm BDO found that Scotland and Northern Ireland are home to most of the 20 areas in the UK with the lowest figure for gross value added (GVA) from the technology sector.

Although Edinburgh, Glasgow and Aberdeen are seen as tech hotspots, the report points out that the Shetland Islands ranks 177th out of 178 areas in the UK with a contribution of £6 million to the UK economy from the sector in 2017.

Areas including South Ayrshire (£23m) and the Borders (£30m) are also among the lowest Scottish contributors.

The report highlights the dominance of London and south-east England which together account for 55 per cent of the UK tech economy and generated some £47 billion in GVA in 2017. In comparison Scotland accounted for £4.1bn with Edinburgh (£1.1bn), Glasgow (£1bn) and Aberdeen and Aberdeenshire (£352m) accounting for most of the total.

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BDO said the county of Berkshire contributed £8bn in 2017, placing its tech sector first out of 178 UK areas. Tech giants Oracle and Microsoft both have their UK headquarters in Thames Valley Park, outside of Reading in the county.

The next four highest areas were all in London – Camden & the City; Westminster; Tower Hamlets; and Haringey & Islington, which together account for 19 per cent of the UK tech sector’s GVA.

Steps to drive growth

Tony Spillett, national head of technology and media at BDO, said: “London and the South East continue to lead the way in the growth of the UK’s buoyant tech industry. Established multinationals, such as Google, Microsoft and Amazon have created tens of thousands of jobs, drawing top talent to the city.

“London’s reputation as a hub of talent, innovation and creativity is a huge driving force behind the capital’s thriving technology industry. Fintech has been a high growth segment and London is seen as a global leader in this field.”

BDO says there are some steps that could drive growth in the technology industry in Scotland, Northern Ireland, and Wales including increasing funding for science, technology engineering and mathematics (STEM) courses at universities, alongside ensuring universities and cities work closer together to retain graduates.

However, a report earlier this year from Tech Nation found that Edinburgh was outperforming the UK on job creation in the digital technology sector.

The tech sector in the Scottish capital employs almost 60,000 people and saw the number of jobs in the sector increase by more than three times the UK average between 2014 and 2017.

It found one in five job vacancies advertised in the Scottish capital are in the tech sector.