The United Kingdom’s slow adoption of digital technology has cost its economy a staggering £111 billion in turnover between 2021 and 2023, according to new research by Virgin Media O2 Business and the Centre for Economics and Business Research (Cebr). The study, which surveyed 1,000 senior IT and finance leaders, exposes a worrying trend: while businesses claim to be digitally ready, most have made little progress in integrating new technologies into their operations.
Despite rapid global advancements, 75% of UK businesses have not significantly increased their digital usage since 2021. This stagnation is more than just a missed opportunity—it is a fundamental barrier to growth. The research found that companies actively investing in digital transformation experienced a 12% increase in turnover, more than double the 5% growth seen in businesses that have been slower to adopt technology. Furthermore, digital leaders also outperformed their counterparts in productivity growth, effectively doubling their efficiency.
Beyond financial gains, digital adoption has wider economic implications. The report estimates that faster tech adoption could have generated an additional 676,000 new jobs, including 313,000 within small and medium-sized enterprises (SMEs). This highlights the direct connection between digital innovation and job creation. Companies that embrace digital transformation are not only strengthening their own competitiveness but are also fuelling economic expansion across multiple sectors.
Industry leaders stress the importance of fostering a strong digital culture. Libero Raspa, Managing Director of adesso UK, believes that fully integrating digital tools into business operations is critical to unlocking long-term growth. He points out that businesses which prioritise digital investment enjoy increased turnover, enhanced productivity, and greater resilience. Similarly, Sachin Agrawal, Managing Director of Zoho UK, argues that digital transformation efforts only succeed when organisations secure buy-in across all levels of the business. He warns that many UK firms still lack the digital maturity necessary to fully capitalise on new technology, leaving them at risk of falling behind their global competitors.
Several key findings from the research illustrate the extent of the challenge:
- Over four in five (81%) businesses with a strong digital culture feel their workforce is prepared for the future, compared to only 43% among those with weaker digital cultures.
- Companies that fail to embrace digital transformation risk stagnation, with many struggling to generate meaningful growth in a rapidly evolving market.
The broader economic picture reinforces the urgency for change. The UK has already seen a decline in its global manufacturing output over the decades, from 9.5% in 1830 to just 4.9% by 1973. Now, as automation and artificial intelligence reshape industries, the country faces a new challenge: technological unemployment. Without proactive investment in digital skills and innovation, many jobs, particularly in lower-wage sectors, could become obsolete.
The £111 billion shortfall should serve as a wake-up call. For UK businesses to remain competitive and drive economic prosperity, they must accelerate their digital transformation efforts. By investing in technology and fostering a digital-first culture, companies can unlock significant growth opportunities, create new jobs, and secure their place in an increasingly digital global economy. The cost of inaction could simply too high.
(Source: LLT)