Knowledge economy is UK's future, says report

The knowledge economy will contribute 50 per cent of the UK's GDP in the next three years, but only if an ever-worsening skills gap is filled, according to a new report commissioned by Microsoft.

The second Developing the Future (Dtf) report, released at the British Library yesterday, showed that the knowledge economy - the income and jobs created by ICT and other technological and innovative sectors - is the fastest growing sector in the UK.

In addition, private sector investment on intangible asses such as software development and R&D now equals that of tangible, such as physical assets.

The UK IT industry is growing at five to eight times the national average, with 150,000 new recruits to the sector needed each year. But there's a problem - the number of students taking A-levels in computing fell by 43 per cent between 2001 and 2006.

"This [report] is a call to action for industry, academia and policy makers to make real changes that will drive continued prosperity in the UK," said Gordon Frazer, managing director of Microsoft UK. "We have an opportunity to harness the innovation, talent and entrepreneurship that exists, but we need to face up to some serious challenges first. Chief amongst these is filling the growing skills gap in the technology sector before it becomes chronic."

The report calls on the government to include computing at the GCSE level rather than just ICT - which studies the use of software and technology, rather than its creation.

As well, the report supports encouraging more women into the sector to help make up for the shortfall. Currently, the IT industry is about 20 per cent female, but only 17 per cent of students are female.

The UK's high growth in the knowledge sector doesn't mean emerging markets aren't a threat, however. The study found that at current rates of growth, China will overtake the UK in the knowledge economy within five years.

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