UK app developers predicted to add £4bn to economy this year

British companies building apps for smartphones and tablets are forecast to generate £4bn in revenues this year, with the UK benefiting more than any other European economy from the billions consumers spend on their phones.

Over a third of the revenues generated by all 28 European member states come from the UK, with 8,000 companies directly involved in app development, employing 380,000 people, according to research commissioned by Google to launch its global I/O conference for app and software developers.

Britain is home to King Digital Entertainment – which makes the blockbuster smartphone game Candy Crush Saga – the BBC and developers such as Mubaloo, which creates apps for other organisations including the Met Office, BP and computing group Hewlett-Packard, makers of some of the most widely used apps on the planet.

Consumers in Britain lead the way in smartphone ownership and spending on mobile shopping and entertainment, downloading more than 250m apps a month, equivalent to four per British citizen per month.

The research predicts that the app economy will be worth nearly £31bn to Britain by 2025.

"The UK is certainly among the top global tech hubs with several metrics indicating that it is in fact the biggest tech hub in Europe and most likely the second most important tech hub after the US," said the report's author, Andreas Pappas, a researcher at VisionMobile.

"In addition, the UK app economy is more export-oriented – developers generate significantly more revenues from high-growth markets outside Europe than other European developers."

The English language has helped developers export their services and sell apps abroad, but Pappas also credits Britain's well structured and maturing technology startup scene, which he says is supported by government and larger companies.

From toothbrushes to bicycles, increasing numbers of products are being offered with an app. VisionMobile estimates that the global app economy was worth over £40bn in 2013 and is growing at about 27% each year, and that in the next five years every company will have an app, in the way that most companies today have a website.

The biggest categories are financial services, news, entertainment, retail, automotive and health. Much online shopping is now done not on a desktop computer, but via mobile devices. On Boxing Day in December 2013, 45% of all online sales were made on a smartphone or tablet.

The revenues measured by Pappas count sales of apps themselves and app-related services such as advertising, but they do not include the value of goods from stores such as Amazon or eBay.

He expects 30,000 jobs to be created in the industry over the next 12 months. Most will be in London, which is home to 31% of app companies, while the south-east has 24%. There are also smaller-scale hubs in Brighton, Cambridge, Birmingham and Edinburgh.

The research counts jobs in companies whose entire business is app development, but also in those whose main business is software development and publishing but where not all staff work on apps. The jobs counted include technical design, but also sales, marketing and management.

An estimated 75,000 work as professional app designers and developers, while 35,000 hobbyists and enthusiasts also moonlight in the sector.

Annual income for developers and designers averages £47,000, well above typical wages for the UK. Women are still under-represented, accounting for 8% of designers and developers. Many in the industry are self-taught, with 83% saying they have had no formal training.

After questioning several thousand developers, researchers found many startups, with 50% of companies in the industry employing less than five people. The average headcount was 47 people. More than 40% of developers generate most of their income from apps, but 22% generate no income at all, suggesting a sizeable group of amateurs and early stage startups.

"The UK has gathered a lot of momentum in the past two years and the government has been visibly supportive," said Pappas. "However, there are several areas where more work needs to be done … continuing tax incentives, providing affordable training, cutting the red tape for fledgling startups and educating entrepreneurs about funding resources and support schemes."