The internet is worth £100 billion a year to the UK economy, a report commissioned by Google claimed today.
It represents 7.2 per cent of the country’s gross domestic product – more than the construction, transport and utilities sectors, the study found.
The release of Google’s report will be seen as a fightback by the internet giant which has come under increasing attacks for privacy breaches by its Street View cars in recent weeks.
Google has finally admitted that the cars it sent out to take pictures of every street in Britain had accidentally downloaded personal data from the households it passed.
In an astonishing invasion of privacy, it admitted entire emails, web pages and even passwords were ‘mistakenly collected’ by antennae on its high-tech Street View cars.
Earlier this month it was forced to admit that its software had ‘inadvertently’ collected fragments of data which were being transmitted as the cars criss-crossed Britain.
Today’s report, carried out by US consultants Boston Consulting Group (BCG), claims that the internet’s share of GDP share is also likely to grow to 10 per cent by 2015.
This would putting the internet’s contribution on a par with the financial sector.
Around 60 per cent of the £100 billion figure was found to come from internet consumption – the amount that users spend on online shopping and on the cost of their connections and devices to access the web.
The remainder arose from investment in the UK’s internet infrastructure, government IT spending, and net exports.
Britain was also found to be a net exporter of e-commerce goods and services, exporting £2.80 for every £1 imported.
In contrast the ‘off-line’ economy exports 90p for every £1 imported, the study found.
The report found that 250,000 people are employed by e-commerce companies in the UK.
Britain was also ranked sixth among the world’s major economies in terms of an ‘e-intensity index’ – a measure of the the reach and depth of the internet.
That put the country above the likes of Germany, the US and France, but lagging behind Japan, South Korea and Holland. The highest ranked country was Denmark.
Altogether, BCG said more than 19 million UK households have an internet connection – a 73 per cent share – with broadband penetration doubling since 2005.
Among the other findings, 31 million adults bought goods or services online in the past year, or 62 per cent of all adults. Collectively, they spent about £50 billion last year on goods and travel.
Paul Zwillenberg, partner with BCG in London, said: ‘The internet is pervasive in the UK economy today, more so than in most advanced countries.
‘Whether they are driving international expansion, improving their interactions with customers or the efficiency of their supply chains, UK companies are increasingly embracing the internet’s potential.
‘Several industries – including media, travel, insurance, and fashion – are being transformed by it.’
Matt Brittin, managing director for Google in the UK and Ireland, added: ‘We all know how the internet has changed the way people access information and communicate.
‘Now for the first time we can see how its adoption by British business has become a major contributor to the UK’s GDP, and that the internet is a central pillar of the UK’s economy.’
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