London’s Silicon Roundabout certainly gets a lot of attention (and even jealousy), but that focus has until now largely been on what the city and country can do for the tech sector. Now we have some idea of how important the tech sector can be for the city.
And it appears tech startups have a very strong role to play, picking up the slack left by London’s declining financial sector.
On Monday, the Centre for Economics and Business Research (CEBR) issued a few pieces of interesting news. I say ‘interesting’, but for the money folks it’s just bad news: London has lost its position as the world’s financial center, and bonuses in the City (the banking district) have fallen dramatically. But all is not lost – caffeinated coders to the rescue!
“The key areas driving the London economy in the years to 2017 are expected to be the MIC [Media, Internet and Creative] sectors of London’s ‘flat white’ economy and the more traditional Business Services such as business consultancy and accountancy,” the think tank said.
Just to drive the point home, the CEBR projects a 31 percent rise in employment in London’s East End by 2031, compared with nine percent for inner West London. The east, of course, is where all the startup action is.
Geography aside, this shift would have some pretty significant social effects, CEBR economist Rob Harbron told me:
“The MIC sector employs a lot more people for any unit of output. It’s expected to help drive employment growth in London over the coming years, and to spread out employment over more people with a lower wage packet.”
In other words, the tech sector may pay less than banking (hardly breaking news, that) but it employs more people.
The irony of this situation, of course, is that London’s tech sector exists largely because of the city’s status in the financial world. If it weren’t for the capital’s capital, chances are the UK’s tech startups would all still be up in the Cambridge hub.
In the end, it comes down to diversification. As the financial crisis has demonstrated quite clearly, London’s extreme reliance on the finance industry is highly risky. That industry isn’t going to go away, of course – not while London stays where it is, geographically speaking – but it does appear that the tech scene is forming an increasingly essential pillar of the city’s economy.
No pressure, then!