The Flat White Economy has overtaken industry to become the UK’s largest economic sector. In 2018 it accounted for 14.4% of GVA and 47% of GVA growth

As the author of the best selling (it actually held the No 1 slot on Amazon for 18 hours!) book The Flat White Economy, I take an interest in how the sector is performing. And every so often look up the latest data to check what is happening.

With the publication of the service sector data for 2018, it is now possible to see how this critical sector has performed in the last year.

To start at the beginning, The Flat White Economy is created by the merge of the digital and creative sectors that so dominates East London from Old Street eastward. One of the most important parts of the sector is the digital marketing that results from the UK’s remarkably high share of online consumers’ and other expenditure. Formally the parts of the economy that my colleagues and I have included in the sector are:

GBServTO: 62 – Computer programming, consultancy & related services TOTAL (£m)

GBServTO: 61 – Telecommunications services TOTAL (£m)

GBServTO: 60 – Programming & broadcasting services TOTAL (£m)

GBServTO: 59 – Motion pic, vid/tv prod; sound recrdin/music publshing TOTAL (£m)

GBServTO: 95 – Repair servs of computers/personal & household goods TOTAL (£m)

GBServTO: 90 – Creative, arts and entertainment services TOTAL (£m)

GBServTO: 72 – Scientific research & development services TOTAL (£m)

GBServTO: 82 – Office admin, office support & other business support TOTAL (£m

GBServTO: 74 – Other professional, scientific and technical services TOTAL (£m

GBServTO: 70.2 – Management consulting services TOTAL (£m)

GBServTO: 73 – Advertising & market research services TOTAL (£m)

GBServTO: 63 – Information services TOTAL (£m)

As recently as 2013, the sector was estimated to be 8.7% of GVA. By 2016 it had risen to 13.3% of GVA. The latest data suggests that by 2018 it had reached 14.4% of GVA. To put this in context, ‘industry’ (which includes manufacturing, mining, power generation and water supply) was 13.8% of GVA in 2016 and has remained at about that level since. So the Flat White Economy became the UK’s largest economic sector measured by direct GVA contribution in 2017. To be fair, industry generates much more knock on activity still, which needs also to be taken into account.

Looking at growth, even last year, when GDP growth had slowed to 1.4%, the sector still grew three times as fast as UK GDP at 4.6%, if a bit more slowly than the 6.8% that it grew in 2017.

Looking forward, the biggest Brexit challenge will be the availability of skilled labour as migration from the EU slows. There is little in any of the possible Brexit outcomes that poses much of a challenge as far as markets are concerned however – fortunately trade down phone lines is unlikely to be held up through customs delays. One trend that is becoming apparent is that the sector is moving increasingly away from London, partly priced out by expensive property.



But the UK’s Flat White Economy remains Europe’s largest and most successful, and is likely to remain so for the foreseeable future. At a time when the outlook for many other sectors is bleak, this is a welcome ray of sunshine.

Contact: Douglas McWilliams dmcwilliams@cebr.com – 020 7324 2860.