The UK’s digital infrastructure helped the country rebound from the economic effects of COVID-19; however, it is still losing ground to Asia in the race for digitalisation, according to new data from Euler Hermes.
The UK is falling behind Asia’s rapidly developing digital economies, with China overtaking the UK on trade credit insurer’s Enabling Digitalisation Index (EDI), rising to 4th, while Hong Kong also moved up four places.
The findings form part of the firm’s latest Enabling Digitalisation Index (EDI), which ranks countries in order of its digital capabilities.
The UK found itself in a cluster of developed economies, including Germany and the US, that was able to limit the economic impact of COVID-19 thanks to the strength of its digital offering and the proportion of its economy within the services sector.
Euler Hermes’ EDI measures the ability and agility of countries to help digital companies thrive and traditional businesses harness the digital dividend. It uses a 0-100 index rating and is based on five components: regulation, knowledge, connectivity, infrastructure and size.
The firm’s index places the US, Denmark, and Germany in the top three countries for offering opportunities for digitalisation. China has risen rapidly up the rankings, from 9th to 4th, due to an increase in its innovation capability. European countries make up five of the top 10 for enabling digitalisation, with the UK placed at fifth, the same as the year previously.
The report also found that Hong Kong is rising fast up the rankings, moving from 11th to 7th in the space of a year, while the Netherlands and Switzerland dropped five and three places respectively.
Alexis Garatti, global head of economic research at Euler Hermes, said: “COVID-19 perfectly illustrated the importance of a strong digital economy if firms are to be resilient and adapt to fast-changing global markets. While the pandemic looks set to subside with the global rollout of vaccines and some return to normality, government investment in the digital infrastructure of tomorrow will be as important as ever.
“The UK’s digital infrastructure performed well throughout the crisis but standing still is not an option. With Asia moving fast up our rankings, the UK and many others across Europe will need to do all they can to support their digital economies as they look to attract and retain the finest talent and firms.
“Commitments to training the workforce and investing in research and development capabilities are key, but so too is education and digital competencies. With Asia’s presence looming large, investment in the potential of the UK’s knowledge base will prove invaluable in the Chancellor’s next Budget and beyond in coming years.”