Economic cross-pollination: Do creative industries boost businesses beyond their own sectors?
In a groundbreaking report titled "Creative Spillovers: do the Creative Industries Benefit Firms in the Wider Economy?", Consultant Rowena Crawford from Frontier Economics has updated the analysis to incorporate the latest data and explored new spillover mechanisms. The report sheds light on the significant impact of the creative industries on firms outside their sector, particularly in terms of innovation.
The creative industries in the UK are more likely to engage in innovation-generating activities and produce both product and process innovations compared to firms in other service sectors, according to the UK Innovation Survey conducted by the Office for National Statistics.
The report reveals that firms with twice the average proportion of hires from the creative industries (6% rather than 3%) are 9% more likely to produce product innovations and 18% more likely to produce novel product innovations. Furthermore, it suggests that around half of this association is due to spillovers, indicating that the creative industry firms generate 'knowledge spillover' benefits, improving the innovation of firms in other industries at little or no cost.
The report underscores the importance of encouraging connections between the creative industries and wider firms. By doing so, policymakers could increase the enjoyment of innovations and knowledge generated by the creative industries, leading to a ripple effect that boosts innovation across the economy.
The creative industries have emerged as a major growth driver within the UK economy, contributing over £124 billion in 2023, about 5.2% of the UK’s Gross Value Added (GVA), and employing 2.4 million people. Their above-average growth rate signifies a dynamic sector influencing the broader economy through innovation diffusion and skills development.
The UK government recognizes the creative industries as one of eight growth-driving sectors in its Industrial Strategy, emphasizing their role in boosting productivity and innovation across the economy. Geographic regions such as the Great South West demonstrate how flourishing creative industries can lead regional economic innovation, outperforming even major cities like London in growth rate.
This regional creative expansion further supports the idea that the creative industry's links to wider firms spark innovation through new business opportunities and entrepreneurial activity. The report suggests that firms that buy twice the average amount from the creative industries (4% of their sales value) are 10% more likely to produce product innovations and 15% more likely to produce novel product innovations.
The study of the creative self-employed workforce in England and Wales is being undertaken by Dr Ruoxi Wang from the University of Sheffield and Bernard Hay, Head of Policy at Creative PEC. Meanwhile, Professor Dave O'Brien from the University of Manchester, Dr Peter Campbell from the University of Liverpool, and an unspecified colleague are studying class inequalities in film funding. The co-location of the Creative Industries with Other Industrial Strategy Priority Sectors is a topic of discussion by Dr Josh Siepe.
The 2025 Spending Review means for the creative industries is a topic of discussion in the UK Government's readout. As the creative industries continue to evolve and grow, the focus on fostering connections between creative industries and wider firms remains crucial in driving innovation and economic growth in the UK.
- Rowena Crawford's updated analysis in the report "Creative Spillovers" emphasizes the significant impact of the creative industries on firms outside their sector, particularly through innovation.
- The UK Innovation Survey shows that creative industries engage in more innovation-generating activities than firms in other service sectors.
- Firms with higher proportions of hires from the creative industries are more likely to produce product innovations, according to the report.
- The creative industry's spillover benefits, such as 'knowledge spillover', improve the innovation of firms in other industries at minimal cost.
- Encouraging connections between the creative industries and wider firms could boost innovation across the UK economy.
- The creative industries contribute significantly to the UK economy, with a value of over £124 billion in 2023.
- The UK government acknowledges the creative industries as a growth-driving sector, emphasizing their role in boosting productivity and innovation.
- Flourishing creative industries in geographic regions like the Great South West can stimulate regional economic innovation.
- Studies on the creative self-employed workforce, class inequalities in film funding, and the co-location of the Creative Industries with other priority sectors are ongoing. The 2025 Spending Review implications for the creative industries remain a vital topic of discussion in the UK Government.
