Improved rural connectivity could add £65bn to UK economy

Despite digital connectivity improving across the UK, creating new opportunities within previously disconnected regions, a stubborn digital divide remains between rural and urban locations, preventing communities and economies from achieving their growth potential, with many areas still unable to access reliable connectivity. A study from the Centre for Economics and Business Research (Cebr) and Virgin Media O2 has put a figure of £65.1bn on what improved rural connectivity could boost the UK economy by.

Superfast business broadband coverage is currently available for 95% of urban areas in England. Yet according to the latest Connected Nations report from UK communications regulator Ofcom, the gap between average urban and rural speeds has widened, following a sustained period during which it narrowed.

Ofcom discovered that during the 8-10pm peak-time period at the end of 2022, there was a 58% difference between average urban (62.1Mbps) and rural (39.4Mbps) download speeds, up from 42% in 2021. While rural speeds increased, the rate of increase was lower than in urban areas, where growth in the availability and take-up of faster cable and full-fibre services is higher.

The Cebr and Virgin Media O2 study, titled The great rural revival, was conducted by Opinium and asked 1,096 respondents with a decision-making role on tasks related to digital connectivity, addressing four sectors central to the UK’s rural economy – tourism, agriculture, manufacturing and small businesses. The survey consisted of both quantitative questions to help generate the data required to model the impacts of improved digital connectivity, and qualitative questions to provide further insight into the challenges faced by rural businesses.

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Overall, The great rural revival highlighted how improved connectivity could enable and power new technologies that transform rural economies and life – from drone farming and smart livestock monitoring to wearable technology and automated booking apps for the hospitality sector.

It calculated that connectivity improvements could boost rural employment by 6.8%, creating an additional 284,000 new jobs, and could add an extra £65.1bn to the UK economy as a whole.

Around a quarter of all rural business decision-makers surveyed as part of the report said they would make greater use of technologies such as cashless payments, video-calling and video-conferencing, or online booking if connectivity was improved.

“The last decade has seen fixed and mobile networks rolled out to new corners of the UK, and now the transformational potential of connectivity has been made clear with the ability to unlock £65bn of new growth in rural areas”
Jeanie York, Virgin Media O2

Looking at specific industries, the report showed that with new applications and digital connectivity rapidly changing the way people travel, spend and behave, the rural tourism industry could benefit from embracing new technology and ways of working. In rural tourism, improved connectivity could potentially result in a 9.9% increase in turnover, equating to an extra £842m per year. Since the pandemic, tourism across rural parts of the UK has soared, with countryside retreats accounting for nearly half of all Airbnb bookings in 2021, compared with 23% in 2019. Meanwhile, disruption to international travel in 2022 saw British hotels, B&Bs and holiday parks record a 20-30% rise in enquiries. 

Regionally, the report showed that across the UK, the east of England would benefit most from digital connectivity upgrades, unlocking a £12bn boost for the local economy and 42,000 new jobs. Other regions set to benefit include the south-west, where the local economy could unlock £7bn and benefit from 39,000 new jobs, and Wales, where £5bn could be unlocked alongside 25,000 jobs. The regional analysis demonstrated how improving rural connectivity directly supports the government’s levelling-up agenda, which aims to spread opportunities more equally across the UK.

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“At a time when communities across the UK are struggling, this new analysis demonstrates how improved rural connectivity could herald a ‘great rural revival’. The last decade has seen fixed and mobile networks rolled out to new corners of the UK, and now the transformational potential of connectivity has been made clear with the ability to unlock £65bn of new growth in rural areas,” said Virgin Media O2 chief technology officer Jeanie York.

“Through working closely with industry partners, the UK government, planning authorities and land owners, we can deliver the essential network upgrades that will help to bridge the rural-urban connectivity divide, provide faster and more reliable coverage, and unlock new jobs and growth in the process.” 

Cebr managing economist Robert Beauchamp added: “Our findings highlight how improved digital connectivity could unleash growth in the rural economy. These impacts would mainly be felt outside London, in regions like the north-west, south-west, and Yorkshire and the Humber.

“Improved connectivity could allow rural businesses to be more efficient, make full use of digital technologies and create more jobs to strengthen the rural economy. Without improved rural connectivity, problems which could be solved will instead remain, and the opportunities related to better connectivity would not be realised, meaning rural communities will continue to underperform relative to their urban counterparts.”

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