Technology trade association techUK’s new Local Digital Index shows that while the UK tech sector continues to outperform most of the economy, growth remains uneven.
The sector contributes £101 billion in Gross Value Added (GVA) and employs 1.7 million people.
Yet growth and investment remain too heavily concentrated in London, Oxford, and Cambridge, the research finds, despite world-class potential across the whole of the UK.
Drawing on 23 economic, connectivity, and skills indicators, the Index provides local leaders, investors and policymakers with a clear picture of where and how the UK’s digital economy can grow faster and more inclusively.
Despite highlighting progress since 2020 – including record gigabit rollout and the establishment of local innovation clusters – techUK is calling for urgent government action to ensure that regional economies can attract investment, connect businesses, and develop the skills that will define the UK’s digital future.
The report finds that overall growth for the digital sector has a forecast of 8.9%, above the UK average. However, the projected rate has decreased slightly since last year’s index (10%). London, Oxford, and Cambridge (the Golden Triangle) still account for a disproportionate share of digital investment.
Gigabit broadband coverage has risen sharply since 2020, from 27.7% to well over 90% in the West Midlands. 5G coverage across the North West has now reached 79.1%, using better technology to improve upon the 82.5% for 4G recorded in 2022.
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These figures underline both progress and imbalance, and techUK is urging the Government to act decisively to translate potential into nationwide prosperity.
It says that investment remains at the heart of innovation; yet capital, both public and private, is still clustered in the South East. It is calling for a deliberate effort to channel investment into high-potential regional ecosystems, ensuring that scaleups from across the UK can access finance.
This includes expanding regional investment funds, aligning Innovate UK and the British Business Bank to support early-stage innovation pipelines, and establishing a Digital Technologies Office for Investment to showcase UK strengths to global investors.
It also says that too many communities and business parks still face slow or unreliable connectivity, and is therefore urging the Government to treat business connectivity as critical national infrastructure, fast-tracking the completion of Project Gigabit and the Shared Rural Network while expanding coverage measurement to include commercial sites, not just homes.
While the UK produces exceptional digital talent, the Index shows growing disparities between where people train and where they find work. Some regions risk becoming ‘training grounds’ for talent that relocates elsewhere.
techUK wants to see a more flexible, regionally empowered approach to digital skills. Reforming the Growth and Skills Levy would allow employers to fund short, modular training aligned with emerging technologies such as AI, semiconductors and cyber security, it says. Local and devolved authorities should also be empowered to reinvest levy underspends into digital inclusion and community-based upskilling.
Universities, meanwhile, should act as anchor institutions for digital adoption, helping local SMEs modernise management practices and embed digital tools across supply chains.
Matthew Evans, director of markets and COO, techUK said: “Our Index shows that there is incredible innovation happening across the whole of the UK. However, only some of the regions are reaping the benefits.
“We must ensure the benefits of innovation reach every region and community. If we invest now in infrastructure, capital, and skills, we can build a digital economy that delivers growth and prosperity everywhere.”
Paul Connell, co-founder and executive chair at The Data City said: “We are very proud that our Industry Engine is providing the Real-Time, Data Infrastructure for the techUK Local Index.
“Helping techUK to continue its vital work to champion the digital economy for everyone. You can see in the data that The UK’s great cities have the digital capability and innovation capacity to power economic growth – it’s time the Government stepped up and backed each one of them to be winners.”