Editorial

Digital investment in public sector to deliver £75 billion boost to economy

A new study shows investments to digitalise health and social care could be worth £33 billion alone, while transforming justice, central and local government could be worth a further £32 billion to the national economy

Posted 17 February 2021 by

Digital processes in the public sector will create efficiency gains and cost-savings which, when invested in improved services and new infrastructure, could create a boost worth £75 billion – and potentially more – to national GDP by 2040.

That’s according to a new study by Virgin Media Business and the Centre for Economics and Business Research (Cebr). The report claims that overall investment in digital technology is set to increase UK GDP by £232 billion (6.9 percent) in 2040

The research, which examines how more digital ways of working can support the UK’s economic recovery from COVID-19, found investment in technology could boost the economy by £74 billion in 2025.

By the end of the decade, sustained digital investment is set to lift UK GDP by £127 billion (4.4 percent) and by 2040 could add £232 billion (6.9 percent) to the national economy – an economic boost of similar magnitude to the current GDP of Finland or South Africa.

Investments to digitalise health and social care could be worth £33 billion alone, while transforming justice, central and local government could be worth a further £32 billion to the national economy, according to the report.

The study noted how 2020 was a challenging year for the public sector, which had to shift to remote working for employees and prioritise digital delivery for people. It said the NHS was – and continues to be – put under enormous pressure in seeking to handle COVID-related hospital admissions. Local authorities, meanwhile, have had to support the most vulnerable by freezing rent payments, supporting food banks, and providing shelter for those in need.

“In the face of these challenges, the public sector has been accelerating digital transformation at pace, with connectivity playing a critical role in supporting new working patterns, providing public services to citizens, and helping to tackle social inequalities,” it said.

“Alongside these advances, the increased adoption of digital transformation in our government-dominated public sectors will also have a long-term positive impact on the UK’s wider economic recovery and future health, across public and private organisations.”

“Every £1 in public-sector funding for R&D and innovation typically returns £7. Short-term interventions around digital transformation provide the city with long-term benefits,” said Dr Jayne Brady MBE, Belfast Digital Information Commissioner at Belfast City Council. “Digital is absolutely critical. We work hand-in-glove with local enterprises, councils, universities and commercial partners to deliver the right strategies.”

Public sector gains will be reinvested and boost the national GDP by an estimated £75 billion (2.3 percent) and potentially more, by 2040, said the report.

Tomorrow we will look in detail how digital investment in health, education, local and central government will impact the economy.