The UK has many more technology companies than the government estimates, according to a new report.
According by the National Institute for Economic and Social Research (NIESR) there are almost 270,000 such companies in the UK, 40 per cent more than the government recognised. Under its classification the government identified 187,600 digital companies.
NIESR also reported that the government’s classification is “outdated” and misses out many tech firms.
The report used data from a variety of sources including Growth Intelligence, a company which tracks the activity of firms on the internet and sells the findings to clients.
Chief executive of Growth Intelligence, Tom Gatten 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“Rather than relying on outdated codes or static lists, our new technology and internet data reveals new opportunities and insights for growth.”
In response to Gatten, an official at the Office for National Statistics (ONS) said: “We are confident ONS statistics reliably measure the size and shape of the economy according to best international practice.”
The study was funded by Google and NIESR chief economist, Hal Varian, one of the people behind Growth Intelligence.
“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.” Varian said.
The report says that official data uses only a basic definition of the digital economy.
The new research goes further by recognising digital companies that are working in traditional sectors including architecture, engineering and publishing, according to the report.
The report goes as far as to identify case studies, including Scottish group Kelton Engineering, which sells hi-tech equipment to the oil industry, but at the moment is classified as “business support”.
Another is Stonewash publishing, a company which provides web design and other internet services, but is classified as “other publishing”.
The NIESR report says companies like these are being incorrectly classified and could be missing out on investment, because investors use classification to identify potential investment targets.
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