Unleashing the Sharing Economy

homesThe Sharing Economy is one of the UK’s fastest growing and most exciting sectors. It entails a host of new companies which are using information technology to allow consumers, other businesses and the public sector to make better use of their existing resources, assets and skills. These assets are as varied as empty driveways and bedrooms, a space at a dinner table or a car available for hire. The revenues generated by these companies such as AirBnb, EatWith and JustPark are rapidly rising and PwC estimates that globally the Sharing Economy will increase in value from £9 billion to £230 billion in the next ten years. Recent research by Benita Matofska suggests that globally the Sharing Economy is growing faster than Google, Facebook and Yahoo combined.

In the UK the revenues generated from five key Sharing Economy sectors: peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing and music/video streaming are expected to rise from £0.5 billion to £9 billion over the next decade. The Sharing Economy is helping to build a nation of capitalised entrepreneurs as well as reducing the waste of resources and helping the public sector to save taxpayers’ money. The average car, for example, is parked for 23 hours a day. Making better use of those 23 hours could lead to higher productivity, reduced air pollution and less congestion.

In a previous Economic Bulletin we explained the importance of the Sharing Economy, the broad measures necessary to help the sector grow and some of the threats it faces. Since then the review of the sector carried out by Debbie Wosskow and the Government’s response to it have been published. Wosskow’s report contains a number of useful recommendations which will help the development of the Sharing Economy, and the Government has taken on a number of these recommendations. More can still be done.

Globally there has been a tendency to view the disruptive progress of Sharing Economy firms with suspicion; this has led to over-regulation, new barriers to entry and sometimes outright bans. Uber, the online taxi-hailing company has been subject to particular vitriol and has seen the brunt of the backlash. In March the French authorities deemed it necessary to raid the company’s Paris headquarters with 30 police officers. South Korea, India, Germany and many other countries have imposed further restrictions on the firm.

It is likely that this heavy-handed regulation will inhibit the growth of the Sharing Economy in those countries compared to the UK which remains one of the few countries which has not carried out a regulatory backlash against the sector. However there are still a number of measures that the new Government should implement which could help the Sharing Economy to achieve its full potential, including in delivering savings for the public sector.

Continue reading…

Tim Knox, Adam Memon - Monday, 11th May, 2015