Aberdeen has high concentration of digital companies

NIESR has created a new method of measuring the scale of the digital economy in the UK. Picture: PA
NIESR has created a new method of measuring the scale of the digital economy in the UK. Picture: PA
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ABERDEEN and central Scotland are home to some of the highest concentrations of digital companies in the UK, according to a new analysis of the digital economy.

However, concentration in the rest of Scotland is patchy, particularly in the Highland and border regions, the study by the National Institute of Economic and Social Research (NIESR) has found.

NIESR has created a new method of measuring the scale of the digital economy in the UK, using mapping tools devised by economic tracking firm Growth Intelligence. Google has described the research as “groundbreaking”.

It estimates that the UK digital economy is 40% larger than official government estimates, is spread throughout Britain, and that digital firms employ more people and are growing faster than non-digital firms.

It shows that Aberdeen and settlements around the Firth of Forth such as the Lothians and southern Fife hold amongst the highest concentrations of digital companies, with west-central Scotland also reasonably well served.

However, aside from some concentrations around the Inverness & Dingwall and Thurso “travel to work areas”, much of the Highland and island areas are in the bottom quartile for digital concentration.

The borders are also poorly served in contrast to neighbouring north east England, where concentrations are relatively high, while London and south east England have the highest concentrations.

New way of understanding the economy

Tom Gatten, chief executive of Growth Intelligence, said: “This research demonstrates the need for a new way of understanding the economy, both for Government and for businesses. Rather than relying on outdated codes or static lists, our new technology and internet data reveals new opportunities and insights for growth.”

NIESR uses as a case study Aberdeen-based Kelton Engineering Limited, which produces oil flow measurement software to clients such as Shell, Mobil and BP. Kelton was previously invisible in official government digital economy figures as it is classed as a “business support” company.

However, NIESR has reclassified Kelton as a “software development” company in recognition of the specific support it provides.

Hal Varian, chief economist at Google, said: “This is a groundbreaking and important report by NIESR not just because it shows that the spread of the digital economy into other sectors is driving growth and jobs throughout the UK but because - for the first time in 65 years - it presents us with a new way of measuring the economy.”

UK Business Secretary Vince Cable said: “This is an interesting alternative report. As our recently published Information Economy Strategy highlights, innovation, entrepreneurship and growth are spread throughout the UK. The information economy transforms every other business sector, driving productivity and creating new opportunities for growth.”