The size of the UK economy could increase 6.9% by 2040 through continued investment in digital technologies to change how businesses operate.
Gross Domestic Product could be £74bn higher than today by 2025, hit an increase of £127bn by 2030 and be £232bn bigger by 2040 if digital investment is sustained, according to a study.
The study from Virgin Media Business and the Centre for Economics and Business Research (Cebr) looked at the potential economic impact of a wave of digital transformation – driven technologies that create new ways of working and connecting. It predicted a potential increase in UK GDP bigger than the total GDP of Finland today (£209bn).
Growth through digital investments would support the economy recovering from the Covid-19 pandemic and inevitable hit from leaving the European Union and its single market. In 2020, UK GDP was £1.96tn, £216bn less than in 2019, largely down to the Covid-19 pandemic.
Cebr said major trends that will transform the world of work by 2040 are flexible working, digital delivery of services, and richer data from AI and analytics.
Accelerated digital transformation across sectors in the UK economy has demonstrated the viability of new ways of working, which can reduce costs and increase productivity.
Cristian Niculescu-Marcu, director of economic analysis at Cebr, said: “History shows us that periods of economic hardship can help to catalyse technological progress and adoption, as businesses and other stakeholders seek to adapt to new realities.”
The research analysed the potential economic impact of “a wave of digital transformation”, instigated by new ways of working and connecting. “This could create an economic high road over the coming decades, helping the UK economy to grow while also having the flexibility to deal with future challenges,” said Niculescu-Marcu.
The study revealed the benefits in business and public sectors, and found that in the UK public sector efficiency can be improved and costs cut. It said health and social care digital investments could add £33bn to GDP by 2040, while transforming justice, as well as central and local government, could be worth £32bn.
Meanwhile, digital investments in the retail, professional services and construction sectors could be worth £33bn. Covid-accelerated digital transformation could boost employee productivity, according to the study, with 12% productivity growth assumption for those employees who can take full advantage of Covid-accelerated digital transformation.
“This is substantively responsible for the economic uplift of 4.8% across the retail, professional service and construction sectors by 2040, driven by continued growth in flexible working, enabling the delivery of digital services and providing richer data sets for AI and analytics,” said the study report.
Peter Kelly, managing director at Virgin Media Business, said: “Moves to accelerate digital adoption are driving extraordinary outcomes across private and public sector organisations, helping them to revolutionise how they work, deliver for customers, and provide vital services for our communities.”
According to a recent report from cloud communications platform provider Twilio, 96% of UK enterprise decision makers noted that the pandemic sped up their company’s digital transformation plans, and of these, 66% said it did so “a great deal”.