25 November 2009

Just 7.5% of the UK's creative businesses hold the key to employment and economic growth in the sector, according to new research released today by NESTA (National Endowment for Science, Technology and the Arts) in conjunction with Aston University and the Economic Research Institute of Northern Ireland. In a speech at the National Creative Industries Conference, Jonathan Kestenbaum, Chief Executive of NESTA, painted a picture of great economic growth potential but also outlined the serious challenges facing the UK's creative industries in the digital age.

Jonathan Kestenbaum said: 'Just a handful of creative businesses were responsible for the expansion of Creative Britain between 2005 and 2008. Without them, we would be telling a story of economic loss not gain.' He also outlined the challenges facing creative sectors - they include the need to develop new business models fit for an increasingly digital world and having access to finance for innovation and growth.

He continued: 'Creative businesses have learned that traditional revenue sources can dry up, in some cases very rapidly, as a consequence of overseas competition and ever-faster technological change. If we don't face up to this threat, then we risk not just the loss of a world-class creative community, but also damaging our cultural identity.'

The analysis of creative firms, with ten or more employees operating between 2005 and 2008, published today by NESTA, follows the methodology of the NESTA 'Vital 6% report' published in October. It also reveals:

• Whilst 6 per cent of all UK companies above 10 employees are classed as high-growth2, the creative industries boast 7.5 per cent.
• 15.7 per cent of Architecture businesses are classed as high-growth. This is above average for the sector overall although this may have been driven by a surge in the construction sector between 2005 and 2008.
• 8.4 per cent of Software, Computer Games and Electronic Publishing businesses above 10 employees are classed as high-growth. 45.3% of all high growth creative firms are in this sector.
• The Publishing sub-sector showed a smaller share of high-growth firms, with only 4.9 per cent.
• London and the South East are home to the majority of high-growth creative firms (66.2 per cent of all high-growth creative firms are located in these two regions).
• London, Scotland and Yorkshire and Humber present above average proportions of high-growth firms as a share of their total number of creative firms above 10 employees (the respective percentages are 9 per cent, 8.5 per cent and 8.5 per cent).

About NESTA

NESTA is the largest independent endowment in the UK. Its mission is to support innovation to drive economic recovery and solve some of the UK's major social challenges. NESTA is a world leader in its field and is in a unique position to support and promote innovation through a blend of practical programmes, policy and research and investment in early-stage companies.

About the creative industries

- The creative industries currently make up 6.4% of the economy and has been growing at 4% a year (the UK has the largest creative sector in the world relative to GDP).

- Including those working in related creative occupations, the creative economy employs just under 2 million people in the UK. Within this, just over 1.1 million are employed in the creative industries themselves.

- Earlier this year NESTA forecast that the creative industries in the UK will grow on average by 4% over the next 5 years (more than double the rate of the rest of the economy), generating £85bn in Gross Value Added (up from £59 billion). By 2013, the sector is expected to employ 1.3million people, likely to be more than the financial sector.

- By 2013, there may be as many as 180,000 creative businesses in the sector, compared to the current 148,000.