Scotland hopes digital revolution will add £12bn to its economy

Report suggests Scotland is being leapfrogged by other developed economies

Scotland could add £12bn to its economy, create 20,000 additional jobs, and 1,000 new businesses over the next five years if it embraces digital technologies, according to a recent report.

The report, entitled Enabling a Digital Scotland, was compiled by ScotlandIS, the trade body for Scotland's ICT industry.

The Scottish ICT industry currently contributes £3.4bn to the economy, and employs 108,000 people, but the report argues that it is trailing other comparable countries.

Although ICT accounts for five per cent of Scotland's economy, the report argues that growth is not as good as it should be.

Recommendations to help Scotland embrace digital technologies include the appointment of a digital champion, help from the Scottish Investment Bank to facilitate and increase finance to SMEs, and a supportive tax scheme to create incentives to innovate and undergo research and development.

"To [improve our digital standing] urgent action is required. Many other comparable countries are leapfrogging us," said David Cairns, chairman of ScotlandIS.

"Indeed, other parts of the UK have jumped ahead of Scotland. And these more tech-savvy countries are enjoying greater economic benefits, including productivity gains, improved competitiveness and a greater ability to export through increased e-commerce."

The report argues that e-commerce is an area in which Scotland could make gains of about £4bn if businesses increased their online sales.

It explains that overall, the UK leads the world in terms of e-commerce, with sales for 2009 at £408.3bn.

The report also argues that the "smarter use" of digital technologies, such as shared services, could increase productivity and add a further £5bn to the economy.

"Scotland needs to be connected for growth. We need a modern digital communications infrastructure as much as we need schools, roads and airports. We cannot change our geographical location on the edges of Europe but we can ensure we are at the heart of a global digital communications network," Donald MacRae, chief economist at Bank of Scotland, said.

Suggestions to make Scotland better connected include ensuring that it has universally available broadband with speeds of at least 16Mbit/s. This compares with the UK's rather paltry target of 2Mbit/s by 2015.

The report also recommends an installation of a direct telecoms connection to mainland Europe, so as to provide resilience to Scotland's national communications network which it says is over-reliant on London for connectivity to the rest of the world.