Value of Ireland’s digital economy set to soar

The value of Ireland’s digital economy is set to soar, more than doubling by 2020, according to a new report.

The research, which was carried out by Amarach on behalf of UPC, said the sector could also add up to 79,000 jobs in the coming years, with a total of 150,000 direct and indirect posts created by 2020.

According to UPC’s second report on Ireland’s digital future, the digital economy is worth an estimated €8.4 billion this year, or about 5 per cent of gross domestic product, but will grow to just over €21 billion within six years. That means it will account for about 10 per cent of Ireland’s GDP by the end of the decade.

“If we reach that staggering number, it will by default have important consequences for job creation,” said UPC chief executive Magnus Ternsjö.

The growth of the sector will be fuelled by a rise in consumer spending, which accounts for about 60 per cent of the overall 2020 value estimate. According to UPC’s projections, consumer spending will more than double by 2020, reaching almost €13 billion.

Although the report showed Ireland was ahead of the average performance in the EU in some respects, Minister for Communications Pat Rabbitte warned against complacency.

“Some 5 per cent of GDP of this economy is to be compared with 8 per cent in Britain, which shows in terms of the online economy, we still have some way to go,” he said.

Despite the projected rise in consumer spending, UPC said about 60 per cent of online shopping will be done with retailers outside Ireland, which means a potential loss of about €8 billion to the sector.

A quarter of Irish companies still do not have websites, with this including 47,000 businesses in the SME sector. This is despite the fact that firms expect 21 per cent of their sales to be online this year, and companies predict digital productivity will lead to higher levels of digital growth.

“We need to collectively address the deficits in the digital progress,” Mr Ternsjö said. “I firmly believe we cannot afford a situation where Ireland is only capturing 40 per cent of the online sales opportunity of €13 billion. We obviously need to encourage Irish businesses to do more online.”

He said the Government had a crucial role to play, and called for focused education and assistance for businesses to enhance their online presence, such as tax breaks.

The availability of high-speed broadband to Irish homes has increased since 2012, with 30 per cent of Irish adults accessing speeds of 30Mbps or more, up from 10 per cent in 2012, and 44 per cent of homes able to access speeds of up to 200Mbps.