UK SMEs missing billions under digital austerity

A mere £300-million investment in super-fast broadband against forecast revenue of some £18.8 billion annually in new business activity seems like a no-brainer. But the Confederation of the British Industry on Wednesday accused Whitehall of entirely having missed the point of its digital strategy by holding back precisely over this point of the Coalition’s spending plans until next elections.

“Broader, faster digital networks are revolutionising how society and business operate, just as the Victorian rail and electrification systems transformed the world in the 1800s,” said CBI’s Katja Hall.

The language might sound grand, yet this discussion cuts through the inane conflict between what popularly we call Keynesians and the pro-austerity gang. Not every new public injection of cash, whether out of taxpayers’ already worn purse or an increase in the state debt rate, is a waste. There is such thing as bad austerity, as much as it has been shamefully proven that there have been and are bad, useless, rotten public spending causes.

That the fat cats of the CBI have aired a word in favour of their smaller colleagues reveals the extent to which the real economy strives to free itself from scholastic, party-politics roundabouts going nowhere–in the UK and in the Eurozone.

Indeed, it’s not only a petition for state cash going into new infrastructure. “None of the ongoing work to boost digital infrastructure will matter if the new networks are not used,” reads the CBI report. “Both industry and government must work harder to give smaller firms the confidence and skills to shift online, where their customers are. We must make sure all the upgrade work does not go waste if we want to stay ahead of the rest of the world.”

The hopeful data comes from small business adviser Go ON UK. Graham Walker, its CEO, recently explained that 99% of the UK’s 5 million businesses are small and medium size companies. According to Go ON, over a third of them haven’t a website and only a third currently sell goods and services online, whereas “annual turnover of UK SMEs could be boosted by over £18 billion if less digital­ly capable firms sold and marketed digitally.”

The UK has a positive story to tell on digital, the CBI assures, but “we cannot be complacent if we want to stay ahead.” European neighbours should listen up.

About the Author

Victor Jimenez
London contributor at thecorner.eu, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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