By Nicholas Fearn
A report published this week by law firm Nockolds claims Wales has the fastest growing digital economy outside London.
The analysis shows that the total number of digital and technology businesses operating in Wales jumped by 9.2 percent last year, in comparison to 11.6 percent in the British capital.
Last year, there were 3,275 digital firms established in Wales, rising from the 3,000 monitored in 2014. While this is only a small increase, many believe it’s an indicator of industry potential in the devolved country.
Digital Wales
As for London, 41,940 companies had operations in the city in 2015, up from 37,575 a year before. The report says the digital industry is becoming increasingly diverse, encompassing areas such as software development, IT consultancy and component manufacturing.
The sector is becoming a source of growth and prosperity in Wales, Nockolds claims, creating new jobs and opportunities in the region—especially around Cardiff and Swansea—as SMBs take advantage of new investment and more affordable rents.
“While London continues to dominate, the growth of the digital economy is reasonably well distributed throughout the country,” said solicitor Nicola Lucas. “Many UK regions benefit from the structural advantages of London but without the high cost base.
“For start-ups the relatively low cost of being based in cities like Cardiff or Swansea can make an important difference in the critical early years.”
Fintech Boom
Lucas added that fintech firms, in particular, are flocking to Wales due to the growth of the investment and financial sectors in the Welsh capital. At the same time, Cardiff is only a few hours away from London by car and train.
“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 businesses who have a significant market on their doorstep, along with an appropriately skilled workforce,” she explained.
Transport is always being improved as well, and there are many lucrative funding opportunities available from organizations such as Finance Wales. The latter is the investment arm of the Welsh Government.
“With improvements in rail networks, particularly Crossrail, which will boost access between Cardiff and Canary Wharf in London, and rents for office space in Cardiff typically less than half that of London, the region is ideally placed to flourish as a digital hub,” concluded Lucas.
“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.”
Responding to the report, Welsh tech entrepreneur Evan Davies said: “I think the industry’s success[ful] in Wales because there’s a community of entrepreneurs and business professionals who help a lot of small businesses grow. There’s also a plethora of support from the Welsh Government and local authorities.”