Better connectivity could boost UK growth by £56bn

• UK GDP could rise by nearly two per cent by closing gaps in high-quality connectivity

• Despite strong headline progress on gigabit connectivity, UK and EU economies have not yet realised the full economic benefits

• Closing the most critical connectivity gaps could unlock £56bn of additional UK output each year and accelerate AI‑driven productivity

• Connecting Europe’s Future report calls for clear delivery priorities to close critical connectivity gaps, accelerate deployment and support AI-driven growth across the economy

The UK economy’s output could grow by £56bn a year by closing the remaining gaps in high-quality connectivity that are holding back productivity and the effective use of AI, according to a new report from EY and Liberty Global. 

Across the EU, the report finds a similar pattern: strong headline coverage, but material productivity gains still dependent on closing connectivity gaps in high‑impact locations.The report, Connecting Europe’s Future, estimates that the UK faces a productivity penalty equivalent to 1.95% of GDP – significantly higher than the EU average of 1.3% - despite having similar headline levels of gigabit coverage. 

While headline coverage has improved materially, the remaining gaps are increasingly concentrated in locations critical to economic performance. Schools, hospitals, logistics hubs, dispersed businesses and public services are among those most affected, creating an outsized drag on growth.

Closing last mile gaps could deliver economy wide gains

Incomplete connectivity is no longer just a rural challenge. Many of the remaining “last‑mile” gaps coincide with places where reliable, high‑quality connectivity matters most for daily operations and AI‑enabled workflows.

As a result, a significant share of the UK’s potential AI‑enabled productivity gains remains stranded. The lost output is equivalent to the contribution of around 1.1 million full‑time workers — without hiring a single additional person.

Everyday sectors and public services most exposed

The greatest exposure sits not in niche technology industries, but in the everyday sectors that underpin the economy and deliver essential services. In the UK, more than half of the total productivity gap is concentrated in five sectors: Education, Wholesale and Retail, Professional Services, Health and Social Care, and Administrative Support. These are large employers that depend on usable, high‑performance connectivity to deploy AI tools at scale.

In highly digital sectors such as Information and Communications, Finance and Public Administration, between 70% and 77% of AI‑related productivity gains are dependent on reliable connectivity, including strong in‑building coverage, low latency and network resilience.

Manuel Kohnstamm, Chief Corporate Affairs Officer at Liberty Global, said: “The ambition on connectivity is clear — in the UK and across Europe — but ambition alone will not deliver the productivity and AI gains now within reach. The priority must be execution: closing the hardest gaps faster, providing long‑term investment confidence, and ensuring that network rollout is matched by real‑world adoption in businesses and public services. The final 15–20% of premises are the most challenging to reach, yet they are also where the economic and social impact is greatest. With predictable regulation, simpler deployment and a stronger focus on take‑up and skills, connectivity can move from being a constraint on growth to a foundation for the UK’s AI‑driven competitiveness.”

Ambition aligned – delivery now decisive 

The analysis highlights that both the UK and EU increasingly recognise connectivity as critical national infrastructure and a foundation for productivity, growth and AI adoption. However, it cautions that delivery — rather than ambition — is now the defining challenge, as global competitors continue to invest heavily in next‑generation networks, cloud and AI capabilities.

To help close the gap, the report sets out clear delivery priorities for policymakers and industry. Key steps include:

• Accelerating progress on the hardest‑to‑reach connectivity gaps, particularly in high‑impact locations 

• Providing long‑term regulatory stability to support private investment 

• Streamlining deployment by reducing friction in planning and permitting 

• Matching network rollout with adoption, skills and demand in businesses and public services

Dr Harvey Lewis, Consulting Partner at EY, said: “This research shows that the UK’s connectivity challenge is no longer about headline coverage figures — it is about competitiveness. While gigabit availability looks strong on paper, the gaps that remain are increasingly concentrated in the places where economic value is created and public services are delivered. When schools, hospitals, logistics hubs and dispersed businesses sit outside reliable, high‑performance connectivity, the productivity impact is felt across the whole economy. These ‘last‑mile’ gaps matter more than the averages suggest because they strand AI‑enabled efficiency where it is needed most, turning connectivity from a technical issue into a structural drag on growth.”