Flat whites and fixies won’t save the economy, but there is some value in the creative pivot

We all play synth. Hipster image via www.shutterstock.com

Despite recent success in generating jobs and overcoming the stresses caused by the financial crisis better than many other countries, the UK economy still has many problems. The economy faces a large balance of trade deficit, £34.8 billion in 2014, as well of course as a large amount of government debt.

There is an overdependence upon finance, at a time when the reputation of the City of London as a financial centre has had some setbacks. Manufacturing, despite occasional hints of a recovery is still much smaller than it was just over a decade ago. Thus between 2002 and 2014 employment in manufacturing declined from 3.7m to 2.6m. Finally, there is a growing imbalance between London, the south-east and the rest of the country as, for example, reflected in house prices.

It is within this context that the search is on for new areas that will generate prosperity and growth for the UK economy in its entirety. One of the key candidates for this is the creative industries. The chancellor, George Osborne, recently highlighted the valuable cultural and economic contribution these make to the UK, commenting that “these fast-growing sectors are creating jobs across the country and each new job means security for another family”.

The Confederation of British Industry has said it’s vital that the strengths of the creative industries are nurtured if the UK is to achieve a balanced high growth economy. It is indeed a sector which is seeing substantial growth and in times like these, that is important.

And in a new book, The Flat White Economy, Douglas McWilliams has focused attention on the role of the creative industries, particularly located in East London. McWilliams’s work led The Observer to ask the question, can hipsters save the world? So, can they? Or if not saving the world can they at least go a long way to solving the UK’s problems? Unfortunately, it’s not that straightforward.

The creative boom?

Government figures distinguish between employment in the creative industries, creative jobs in the creative industries and creative jobs outside the creative industries. The term “creative economy” tends to be used to encompass all of these.

The latest figures suggest approximately 2.5m people are employed by the creative economy in all, with about a third of these being outside the creative industries. The biggest sub-sector is IT, software and computer services, with many of the people employed being computer consultants. Within the creative industries the next three biggest sub-sectors are:

  • Music, performing and visual arts
  • Film, TV, video, radio and photography
  • Publishing

If we include creative jobs outside the creative industries then advertising and marketing is the second biggest sub-sector. These people are some of our brightest and best. It is estimated that in the creative economy some 58% have the equivalent of a degree, compared to just 31% of those in all jobs. Put it another way, one in six of all graduates is in the creative industries.

Exports from creative industries amounted to £17.3bn in 2012, equivalent to 8.8% of service exports. But given the numbers and skills of its workers and that service exports were only 38% of total exports in 2011, this figure becomes less impressive. In addition, almost 75% of these exports come from the IT and film groups, hence much of the rest of the sector has little export value.

Of course it is not that simple – and many who work in creative jobs outside the creative industries contribute to exports. In addition, museums and arts attract considerable numbers of tourists and add to our international reputation. Nonetheless, given that this sector employs some of our most qualified people, and given the number who work in it, it could be argued that its expansion is not helping rebalance the economy in this sense.

London reaps the benefits, but what about the rest of the country? Jonathan Brady/PA

London calling

The imbalance is evident in other ways too. More than 44% of the jobs in the creative economy are in London and the south-east. These account for 16.2% of the jobs in London and 10.1% in the south-east. Looking at just the creative industries, almost a third of the jobs in the entire UK are in London.

Of course creative industry jobs are found and are of importance elsewhere. These are often in clusters, due to agglomeration advantages. The Bristol and Bath areas, for example, place substantial importance on the creative industries. Nonetheless, the bulk of activity is in and around London.

The creative industries are a slightly artificial grouping. Many of the firms involved tend to be small, often very new businesses and, as we know, many new businesses quickly disappear.

Balancing act

Great hopes have been placed on this sector. Across Europe and much of the world the world it is seen by many as the future. In the UK it has been an area of substantial expansion and its success is something to celebrate. But the creative industries are not of themselves going to drive the UK economy forward.

In rebalancing the UK economy away from financial services, their growth is bringing a different kind of imbalance both spatial and industrial. And above all they are no substitute for a dynamic, innovative and export driven manufacturing sector.

There is a potential role here for the creative industries to play in linking up with firms in the manufacturing sector. And there is always a vital role for creative people to play regardless of what sector they are employed within.