Wales

Wales' 'fastest growing' digital economy outside London

Digital graphic Image copyright Thinkstock

Wales has the fastest growing digital economy outside London, according to a report on the sector.

The number of digital enterprises in Wales jumped by 9.2% last year, says the analysis by law firm Nockolds.

Numbers rose from 3,000 in 2014 to 3,275, although this is below all UK nations and regions except for Northern Ireland and north east England.

The report said cities including Cardiff and Swansea could "flourish" because of comparatively low rents.

The number of digital businesses in London rose by 11.6% - from 37,575 to 41,940 during the same period.

Digital businesses range from software and app development to IT consultancy.

According to Nockolds, Wales has emerged as one of the fastest growing UK nations or regions in recent years, with the digital economy a key driver of growth.

The report said the surge in new business creation in the tech sector in Cardiff was fuelling a jobs boom, which is "rippling out" to the wider south Wales region.

The Welsh Government estimates there are currently more than 600 firms in the IT sector alone, employing an estimated 30,000 people - around 3.5% of the Welsh workforce.

Meanwhile, there are ambitious plans in the Swansea Bay City Region, aiming to create up to 33,000 jobs over the next 20 years along an "internet coast".

Nicola Lucas, a solicitor at Nockolds, said the growth of the digital economy was "reasonably well distributed" throughout the UK.

'Green shoots'

"Cardiff is particularly attractive for financial technology start-ups," she said.

"The growth of the financial sector in Cardiff, which has benefited from the relocation of back and middle office functions post-financial crisis, is providing fertile ground for fintech [financial technology] businesses who have a significant market on their doorstep, along with an appropriately skilled workforce."

She added that rail network improvements would improve access while office rents in Cardiff were typically less than half that of London.

"The only concern is whether Wales can provide the funding environment to hold onto start-ups once they reach a certain scale, or whether these businesses will focus expansion in other regions, such as London," said Ms Lucas.

Warren Fauvel, founder of digital health business Nudjed and part of Cardiff Start, a collective of business start-ups, said there were lots of positive signs for the sector in Wales.

"It's a really exciting time for us in Cardiff, Swansea and across Wales and these figures back up what we probably know as a community is starting to happen," he said.

"But one of the key things to emphasise is it has to be supported by a consistent strategy that looks across the decades and not just at figures right now."

He said the digital economy was a great way for Wales to have international businesses again after the decline of traditional industry.

Mr Fauvel, who was brought up in Rhondda, said there needed to be good literacy, numeracy and science education to help Welsh people see beyond the valleys and cities they live in.

"We need continued support from government, local authorities and we need an education system that produces students with good core skills - it's not the most exciting message, but it very much comes down to the people," he said.

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