Introduction
The government is preparing an industrial strategy that will focus on sectors offering the highest growth opportunities for the economy and businesses. Eight growth-driving sectors have been identified. Mickledore has considered the drivers of change in these sectors and the implications for business support and investment.
What are the Creative Industries?
The Department of Culture, Media and Sport (DCMS) has classified creative industries into seven sub-sectors, which is an extremely useful starting point in considering creative industries in terms of economic development. Such an approach is sorely missing from some of the other umbrella sectors identified by the Modern Industrial Strategy Green Paper.
The nine sub-sectors are:
- Advertising and marketing
- Architecture
- Crafts
- Design and designer fashion
- Film, TV, radio and photography
- Museums, galleries and libraries
- Music, performing and visual arts
- Publishing
- IT, software and computer services (includes video games)
What the classification does highlight, however, is that a single strategy cannot cover all the sub-sectors, and locations are unlikely to be strong in all nine areas.
Drivers of change
As with almost all of the core sectors in the Industrial Strategy, technology is probably the most significant driver of change.
- In many of the creative industries, the commercial model has been changing as the medium has been digitalised. The approach has enabled digital businesses to reach vast audiences instantly, but at the expense of the platform having significant control over returns. In this way, big business has more effectively monetised individual talents.
- There is growing concern that AI will become a primary generator of creative content, reducing the reliance on individuals.
- The digitalisation of almost every area of the creative industries has enabled a distributed or remote workforce, with the result that capturing the location of a major player in the creative industries will not necessarily directly lead to large-scale, high-value employment.
- Increased wealth and a focus on experiential leisure time is growing the market globally and consumers are increasingly seeking personalised content.
- A significant portion of the creative workforce operates on a freelance or project-based basis, which impacts employment stability, social benefits, and skill development. For many, the creative industries offer a precarious career.
The drivers of change, whilst generalised across quite different sub-sectors, point to an industry where business models are shifting and the larger digital platforms are securing a greater proportion of the overall return and increased power.
UK Position - opportunities and issues
The UK has recognised the importance of the creative industries to the extent that it created DCMS in 1997, and the department remains a mainstay of government.
DCMS estimates that the creative industries contributed approximately £124 billion to the UK economy in 2023, accounting for 5% of the total UK economic output. The IT, software and computing services is the largest sub-sector, contributing 40% of the creative industries' production. There were approximately 2.4 million jobs in the creative industries during the year from July 2023 to June 2024, accounting for around 7% of all jobs in the UK. Exports of goods and services for the creative industries were worth £54.7 billion in 2021, accounting for 7.7% of the UK's total exports that year.
Clearly, in terms of economic analysis, some sectors are double-counted in the Industrial Strategy, such as Professional and Business Services (e.g., advertising) and digital (e.g., IT, software, and computer services). However, the UK has a significant strength in these sectors.
The UK retains some of the larger organisations in the sector, but the major platforms are primarily US-based, and recent tariff statements regarding film and TV production highlight that the sector is not immune to global economic shocks.
Securing growth and investment at the local level
The UK government is seeking to focus on the sector, and in January 2025, announced a £60 million package of support for the industry, including £40 million of investment for start-up video game studios, British music and film exports, and creative businesses outside of London.
It is helpful to separate business-to-business (B2B) creative industries activity from consumer-directed activity. The scale of B2B activity is likely to be linked to people and ideas like that of Professional and Business Services. A large catchment area of people, office accommodation will be important, further stimulated by the presence of a University or larger Further Education College.
Creative industries targeting consumers are more likely to be based around those individuals with creative talent. Evidence suggests that communities working in similar media may congregate, enabling creative collisions and stimulating new ideas and growth. This, however, is a more organic process, and any role of economic development would be to support and grow existing communities, rather than assuming that anything new would likely start from scratch. This is often particularly difficult at the individual producer level because returns on investment are minimal.
Where the work is successful, however, there is a direct read-across to the visitor economy, as locations such as Hay-on-Wye (literature), St. Ives (art), Stratford-upon-Avon (theatre), or even Liverpool to some extent (music) would testify.
Conclusion
When considering economic development and the creative industries, it is worth examining B2B players in a similar manner to the Professional and Business Services sector, with a local proposition linked to the workforce catchment area, higher or further education establishments, and available office space. This is a sector where well-established business networks are beneficial.
For those creative industries focused on consumers, growth is more likely to be organic, arising from existing local groups. Support for this aspect of creative industries is more likely to be supporting their local activities through workspace and events and trying to stimulate even greater levels of activity. This often has its challenges in terms of return but can be aligned with a visitor strategy in some cases.
Mickledore is an economic advisory business specialising in strategy, investment, business cases, and evaluation. We have worked on sector strategies across the UK. For more information or a discussion about specific local circumstances, contact Nigel Wilcock at nwilcock@regionaldevelopment.co.uk