I was humbled recently to be asked by the government to contribute future policy recommendations to supercharge post-Brexit growth. 

Our main recommendation was to champion some of the things we, as a country of entrepreneurs, are already very good at: ecommerce, the internet and the science of following consumer behaviour. 

Consumption represents 70% of the UK economy, so leading in this area makes economic and social sense. People revere, admire and fear Amazon for its power and reach today, but they often fail to remember that it started in a very simple form, as an online bookstore with arguably the world’s best consumer entrepreneur at the helm. 

The UK boasts tremendous entrepreneurs and executives in ecommerce and the internet in general, many of whom pioneered their respective consumer categories.

Tim Steiner at Ocado, Natalie Massenet at Net-a-Porter, Nick Robertson at Asos, Matt Moulding at The Hut Group and, more recently, Will Shu (Deliveroo) and Ben Francis (Gymshark) among many others should all be embraced and celebrated as groundbreaking entrepreneurs who can help provide a foundation and inspiration that catapults the UK’s leadership in this area. 

Using this foundation, why couldn’t the UK government create a Berkshire Hathaway equivalent in ecommerce and the internet? A long-term, patient-capital business that champions UK competitive advantage in key future industries.

“This ‘highly efficient’ tax planning adds up to billions of pounds that have been reinvested to compete against UK operators, in turn impacting the UK’s long-term economic prospects”

While this may sound like a distortion of the playing field, the irony is that fiscal policy has thwarted UK-domiciled consumer champions for many years, compounding an advantage for the non-domiciled global tech giants that they have eagerly exploited. 

This ‘highly efficient’ tax planning, compounded over many years, adds up to billions of pounds that have been reinvested to compete against UK operators, in turn impacting the UK’s long-term economic prospects.

With that in mind, focusing on levelling that playing field in favour of potential UK sector champions should be more of a focus than a blanket UK digital tax, which appears poorly thought through and regressive in nature given that the future of consumer behaviour is undoubtedly multichannel.

Why create a disincentive in an industry we lead in and that will undoubtedly be a bigger part of the future?

The good news is we are starting from a strong foundation. According to Zenith, the UK consumer spends on average more than 250 minutes per day on the internet – second only to Estonia, comfortably ahead of the US and more than twice that of France and Spain, while smartphone adoption is on a par with the US. 

Population densities are high – 20% higher than Germany, more than twice France and multiples of that of the US – which are conducive to highly scalable economics and a fertile global testing ground. 

In the last decade, more than 120 new $1bn tech companies have emerged in Europe, today together worth more than $600bn. The UK has built nearly 200 of them, with Germany lagging at about 100. 

Contrary to popular narrative, fintech and biotech have been responsible for less than 20% of the unicorns built. According to the Organisation for Economic Co-operation and Development, more than 4% of all employees in the UK work in new-economy companies, versus just 2% for the US and 1% for Germany, meaning the supply of talent is available, created by the world-class universities at our disposal.

The fact that London is the top financial centre in Europe, if not globally, positions us well to back these entrepreneurs. These foundations matter.

“Few also notice that the great unbundling of traditionally named industries blurs sector lines and opens up much bigger markets to disruption than ever before”

So where is the incentive? The pandemic has led to a giant step forward in ecommerce penetration, a natural acceleration of five to 10 years achieved in just weeks. 

Few also notice that the great unbundling of traditionally named industries blurs sector lines and opens up much bigger markets to disruption than ever before. 

For example, the World Bank values the global retail market at $22tn whereas consumer spending (i.e., the real target for entrepreneurs) is $60tn of products and services. 

If we just take the front end of the internet (ecommerce, marketplaces), total earnings today account for 5% to 7% of all total earnings globally and represent 10% in market capitalisation. 

Assuming the market grows in line with global GDP – 3% to 4% – and the penetration of the internet rises to 30% to 35% (still below some early adoptive categories’ levels) by 2040, this represents $1.6tn to $2.25tn of net profit versus the $40bn to $50bn delivered today, or an increase of 40 to 45 times. 

“Imagine the potential for the UK to take a proactive, policy-driven approach to accessing these structural growth opportunities in a systematic way”

True today owns direct-to-consumer internet businesses that deliver more than £200m of revenues, growing at a compound rate of above 35% per annum with EBITDA margins of more than 10%. 

Participating in the growth of these companies is exciting enough for us, but imagine the potential for the UK to take a proactive, policy-driven approach to accessing these structural growth opportunities in a systematic way.

As a country, we should focus long-term capital, the best talent and the best infrastructure in becoming the champions of the global internet. While multichannel will live on, the internet will dominate and technology will be at the heart of every successful future business model – whether consumer-facing or not. 

The foundations are there, the opportunity for this country is enormous and I hope we can take it.