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[Resources] The Present Situation and Prospects of Sharing Economy in the United Kingdom
According to the European Commission (EC, 2016-2), 52 percent of EU citizens are aware of shared economy services, 17 percent are not low enough to have used them at least once, and the size of the shared economy is small but growing fast in recent years. In particular, the UK's shared economy has grown at a rapid pace, making it the largest common economic hub in Europe. It is meaningful to look into the future of the Republic of Korea to see the implications of revitalizing the shared economy by looking not only at the economic aspects of the U.K. but also at the policy environment, such as the size of the shared economy and the trend of growth.
According to PwC (2016), the UK's shared economy accounted for about one-third of Europe's shared economy in 2015 and grew the fastest in Europe. Based on the five areas of transportation and accommodation, financial, household services and professional services, the size of Europe's shared economy transactions and fee-based platform sales in 2015 amounted to 28.1 billion euros and 3.6 billion euros, respectively, which grew 77 percent and 97 percent year-on-year (PwC, 2016a). In that area, UK revenue in 2015 is estimated to be £7.4 billion and £850 million, up 92% and 101%, respectively, above Europe's growth rates (PwC, 2016). By sector, the UK's shared economy grew by three sectors: transportation, accommodation and finance. Financial and accommodation accounted for 40 percent and 37 percent of the UK's shared economy trading volume in 2015, respectively, with about 80 percent of the two sectors (PwC, 2016b). On the other hand, transportation and accommodation accounted for 38% and 27%, respectively, in terms of platform sales, with the two areas accounting for about 68% of the UK's shared economy (PwC, 2016b).
In the future, the performance of the UK's shared economy is expected to continue and post high growth rates of over 30 percent annually from 2015 to 2025. UK common economic transactions are expected to grow at an annual average rate of about 35% from 2015 to about 140 billion pounds by 2025, (Pwc, 2016b). The UK's shared-economy platform revenue is also expected to grow by about 34% annually over a decade from 2015 to reach £18 billion in 2025. (Pwc, 2016b). By 2025, financial and transportation will still form the largest volume in terms of transaction volume and platform sales, but the pace of growth is expected to be the fastest for household services (PwC, 2016b). From 2015 to 2025, the volume of transactions in the shared economy and financial sector and the sales of platform in the transportation sector are expected to grow at an annual average rate of over 30%, but the sales of household service platforms are expected to expand at an annual rate of about 45% (PwC, 2016b).
So let's look at what the UK's shared economy policy is and what the regulatory environment is like.
A shared economy-friendly policy and regulatory environment can be cited as a major factor that has led Britain to emerge as the hub of Europe's shared economy. The UK Government is also positive about the importance of a shared economy and the creation of a system that promotes the use of a shared economy, for example: The Digital Economy Minister (Ed Vaizy) said that the government aims to promote a shared economy first and that Britain is the center of a shared economy around the world (Park Yu-ri et al, 2016). Eric Pickles issued guidelines to the local council to make parking sharing services such as Justpark available in areas where parking difficulties are severe (Park Yu-ri et al, 2016). In addition, the Department for Business, Innovation and Skills (BIS, Department for Business, Innovation and Skills) issued a positive review of the recommendations made by the private sector to become a global shared economic hub at the request of the UK government in September 2014. According to the report, in the case of accommodation sharing, a representative area of the shared economy, the British government already said that it is applying different regulations on commercial accommodation and the provision of accommodation sharing services to their residences, and stated that the accommodation sharing service provider may also be exempted from a tax of £4,250 on maximum rental income under the Rent-a-Room Scheme. Meanwhile, the court ruled in favor of the vehicle call service, which leads the shared economy along with lodging and sharing services. In a lawsuit filed by the Transport for London against the continued claim of Uber app illegality by the Licensed Taxi Drivers' Association (LTDA), the High Court decided the Uber app was not a breach of law (BBC, 2015.16.). As a result, Uber Services was legalized in London.
In an era of global low growth, interest in the growth potential of a shared economy is surging around the world. Britain had earlier paid attention to the innovation and potential of the shared economy and created a shared economy-friendly environment. This policy environment contributed to the UK's formation of the largest shared economy market size in Europe based on the high ICT utilization rate and infrastructure needed to revitalize the shared economy, such as the spirit of entrepreneurship. This is expected to be a big boost not only for Britain to lead the shared economy in Europe, but also to achieve its goal of becoming a global shared economy hub. Korea is also showing growing interest in the potential of a shared economy that revolutionizes the service industry as a new growth engine due to the slowing growth of the manufacturing sector that has led the economy. However, the growth of the shared economy is slow due to insufficient conditions including laws and systems that correspond to interest. However, Korea also has a high level of ICT infrastructure and ability to utilize it, which has ample potential for growth of the shared economy. Therefore, to realize the potential for growth of a shared economy, efforts by all market participants, including the government, are needed to create an environment where shared economy can be activated, such as improving the law and systems for existing businesses and improving the system of startup businesses that present innovative shared economy business models, as well as establishing an ecosystem for startups that can succeed in the market, as well as establishing a consumer protection system and a trust system that can safely be used from dog-recognition, hygiene, crime, etc.
According to the European Commission (EC, 2016-2), 52 percent of EU citizens are aware of shared economy services, 17 percent are not low enough to have used them at least once, and the size of the shared economy is small but growing fast in recent years. In particular, the UK's shared economy has grown at a rapid pace, making it the largest common economic hub in Europe. It is meaningful to look into the future of the Republic of Korea to see the implications of revitalizing the shared economy by looking not only at the economic aspects of the U.K. but also at the policy environment, such as the size of the shared economy and the trend of growth.
According to PwC (2016), the UK's shared economy accounted for about one-third of Europe's shared economy in 2015 and grew the fastest in Europe. Based on the five areas of transportation and accommodation, financial, household services and professional services, the size of Europe's shared economy transactions and fee-based platform sales in 2015 amounted to 28.1 billion euros and 3.6 billion euros, respectively, which grew 77 percent and 97 percent year-on-year (PwC, 2016a). In that area, UK revenue in 2015 is estimated to be £7.4 billion and £850 million, up 92% and 101%, respectively, above Europe's growth rates (PwC, 2016). By sector, the UK's shared economy grew by three sectors: transportation, accommodation and finance. Financial and accommodation accounted for 40 percent and 37 percent of the UK's shared economy trading volume in 2015, respectively, with about 80 percent of the two sectors (PwC, 2016b). On the other hand, transportation and accommodation accounted for 38% and 27%, respectively, in terms of platform sales, with the two areas accounting for about 68% of the UK's shared economy (PwC, 2016b).
In the future, the performance of the UK's shared economy is expected to continue and post high growth rates of over 30 percent annually from 2015 to 2025. UK common economic transactions are expected to grow at an annual average rate of about 35% from 2015 to about 140 billion pounds by 2025, (Pwc, 2016b). The UK's shared-economy platform revenue is also expected to grow by about 34% annually over a decade from 2015 to reach £18 billion in 2025. (Pwc, 2016b). By 2025, financial and transportation will still form the largest volume in terms of transaction volume and platform sales, but the pace of growth is expected to be the fastest for household services (PwC, 2016b). From 2015 to 2025, the volume of transactions in the shared economy and financial sector and the sales of platform in the transportation sector are expected to grow at an annual average rate of over 30%, but the sales of household service platforms are expected to expand at an annual rate of about 45% (PwC, 2016b).
So let's look at what the UK's shared economy policy is and what the regulatory environment is like.
A shared economy-friendly policy and regulatory environment can be cited as a major factor that has led Britain to emerge as the hub of Europe's shared economy. The UK Government is also positive about the importance of a shared economy and the creation of a system that promotes the use of a shared economy, for example: The Digital Economy Minister (Ed Vaizy) said that the government aims to promote a shared economy first and that Britain is the center of a shared economy around the world (Park Yu-ri et al, 2016). Eric Pickles issued guidelines to the local council to make parking sharing services such as Justpark available in areas where parking difficulties are severe (Park Yu-ri et al, 2016). In addition, the Department for Business, Innovation and Skills (BIS, Department for Business, Innovation and Skills) issued a positive review of the recommendations made by the private sector to become a global shared economic hub at the request of the UK government in September 2014. According to the report, in the case of accommodation sharing, a representative area of the shared economy, the British government already said that it is applying different regulations on commercial accommodation and the provision of accommodation sharing services to their residences, and stated that the accommodation sharing service provider may also be exempted from a tax of £4,250 on maximum rental income under the Rent-a-Room Scheme. Meanwhile, the court ruled in favor of the vehicle call service, which leads the shared economy along with lodging and sharing services. In a lawsuit filed by the Transport for London against the continued claim of Uber app illegality by the Licensed Taxi Drivers' Association (LTDA), the High Court decided the Uber app was not a breach of law (BBC, 2015.16.). As a result, Uber Services was legalized in London.
In an era of global low growth, interest in the growth potential of a shared economy is surging around the world. Britain had earlier paid attention to the innovation and potential of the shared economy and created a shared economy-friendly environment. This policy environment contributed to the UK's formation of the largest shared economy market size in Europe based on the high ICT utilization rate and infrastructure needed to revitalize the shared economy, such as the spirit of entrepreneurship. This is expected to be a big boost not only for Britain to lead the shared economy in Europe, but also to achieve its goal of becoming a global shared economy hub. Korea is also showing growing interest in the potential of a shared economy that revolutionizes the service industry as a new growth engine due to the slowing growth of the manufacturing sector that has led the economy. However, the growth of the shared economy is slow due to insufficient conditions including laws and systems that correspond to interest. However, Korea also has a high level of ICT infrastructure and ability to utilize it, which has ample potential for growth of the shared economy. Therefore, to realize the potential for growth of a shared economy, efforts by all market participants, including the government, are needed to create an environment where shared economy can be activated, such as improving the law and systems for existing businesses and improving the system of startup businesses that present innovative shared economy business models, as well as establishing an ecosystem for startups that can succeed in the market, as well as establishing a consumer protection system and a trust system that can safely be used from dog-recognition, hygiene, crime, etc.