5G technology to boost UK economy by up to £15.7bn by 2025
A new Barclays report reveals that the introduction of a 5G mobile telecommunications network could increase annual UK business revenues by up to £15.7bn by 2025
- The sectors set to see the highest revenue growth are distribution (£3.6bn), manufacturing (£2bn), professional services (£1.1bn) and business services (£1bn)
- Despite the benefits, just four in ten (39%) business decision makers say they know how their business can make the most of 5G, and only 15% of businesses are currently thinking about how they can harness the new technology
New research from Barclays Corporate Banking shows that 5G could supercharge the UK economy by up to £15.7bn per year by 2025 – but the opportunity could be missed because industry leaders still do not know enough about the benefits of investing in the technology.
The report 5G: A Transformative Technology analyses a series of potential scenarios that UK businesses could face when implementing 5G. Under an ‘optimistic scenario’, which anticipates an accelerated rollout of 5G and an enhanced uptake amongst UK businesses and consumers, the UK will see a £15.7bn increase in business revenue by 2025. A slower-than-anticipated rollout and limited use would deliver around £8.3bn of added revenue to the UK, while the current pace of development added revenue would reach £13bn.
The optimistic scenario could be a reality for British businesses, as mobile providers are already beginning to introduce 5G capabilities on a large scale this year, including pilots underway in London, the Midlands, Edinburgh and Belfast.
The Government is also supporting 5G by incorporating it into its Industrial Strategy, having pledged £1bn towards digital infrastructure. The bidding process for 5G licences, meanwhile, opened to the telecoms industry last year.
Rolling out 5G
Accelerated rollout spells a positive picture for regional growth, which would provide opportunities outside the usual technology hubs of London (£4.1bn increased business revenue) and the South East (£2.5bn). The North West (£1.4bn), East of England (£1.3bn) and the South West (£1.1bn) make up the rest of the top five. Scotland comes close to, but just behind, the South West, also at £1.1bn – showing that 5G development is not an initiative that will just benefit a small pocket of the country.
Under the optimistic scenario, the business areas set to see the largest revenue increases are distribution (£3.6bn), manufacturing (£2bn), professional services (£1.1bn) and business services (£1bn). The diverse range of sectors set to see a boost to revenue is a testament to the wide applications of 5G technology.
The new Barclays research revealed that a majority of businesses (58%) are already benefitting from fast communications technology like 4G and ultrafast broadband. This is because it allows companies to operate across disparate locations (59%), communicate with customers and potential customers (49%) and connect multiple machines and devices (48%).
5G can further enhance these operations through benefits including peak data rates 20 times faster than 4G and simultaneous connections for one million devices per square kilometre. The extreme speed paves the way for innovations in artificial intelligence, robotics and large-scale Internet of Things (IoT) usage. For businesses, this means more extensive machine-to-machine communications, using self-driving vehicles and better overall infrastructure – amongst other new applications.
Despite the demand for current communications technologies and the potential applications for 5G, the Barclays survey of 526 British businesses found just four in ten (39%) business decision makers know how their business can make the most of 5G. When it comes to preparing for 5G, only 15% of businesses are thinking about how to harness the new technology. The sectors most likely to have plans for 5G are TMT (23%), logistics (18%) and hospitality and leisure (17%) – but it is clear a majority of businesses are not ready to successfully join the 5G revolution.
Sean Duffy, Head of Technology, Media and Telecoms at Barclays Corporate Banking, comments:“The rollout of 5G offers a huge opportunity for the UK. We’re seeing massive potential for business growth, which ultimately delivers a positive knock-on effect for the whole economy. While the Government and network providers are already working hard to introduce 5G in the UK, we found that businesses do not yet have enough clarity about how they will benefit in the long-run. What’s more, nearly four in ten business leaders still aren’t entirely sure what 5G is.
“To ensure the UK can realise the full potential of an accelerated rollout, the Government, mobile operators and other corporate partners – including financial institutions – have a job to do in order to raise awareness amongst businesses so they can harness 5G. This support is crucial for businesses to make smart investments which will unlock the power of 5G.”
Margot James, Minister for Digital and the Creative Industries, said: “The Government is committed to ensuring businesses can harness the power of this revolution in mobile connectivity. The benefits set out in this report and the potential to add billions to our economy are exactly why we're investing in the UK’s strong 5G ecosystem.
“Through our modern Industrial Strategy, we’re focussed on delivering real-world benefits from 5G in important sectors of the UK economy - providing new services, increasing productivity and improving quality of life.”
While awareness is low for some sectors, the good news is that those industries with an understanding of 5G are already investing, or planning to invest, in the technology. The sectors planning significant investments into 5G technologies within their business are TMT (35%), logistics (34%), business services (28%) and manufacturing (24%).
Even if businesses may not be immediately planning to invest in 5G technology in the short-term, across sectors, 40% of business decision makers said they expect 5G to increase their revenue over the next five years – a clear indication of the value placed on the technology and the commercial benefits that leaders expect it will provide.
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