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Special report - Finance and Technology

The Industrial Revolution, interpreted by many historians as starting from 1760, saw the major upheaval of thousands of years of agrarian living for most of the population and the shift to living in close proximity to others in conurbations.

This transformation was by no means as revolutionary as it sounds. It is true that the population of London more than doubled from about 700k in 1760 to 1.7m in 1830, but this took more than a lifetime – life expectancy was no more than 40 for most of this period. 

A more startling aspect of the industrialisation of the whole economy at least in UK terms, was the tremendous boost it gave to the wealth of the whole country. Broadberry et al (LSE, 2011) calculated that UK GDP grew from £104m in 1759 to £378m in 1831, and then on again to £1bn by 1871. The population had tripled over the 112 years to 34m, leaving the average person significantly wealthier. 

The UK is no longer so dependent on manufacturing. With the services sector so important now, it is not unreasonable to see innovation creeping into financial services and the finance function itself. We have already seen the growth of nascent software products in the early 1980s (namely Visicalc, Lotus 1-2-3, Multiplan and SuperCalc) to the dozens of cloud-based accounting packages available now. The functionality of spreadsheets has grown from a maximum 20k of memory in 1978 to 2GB now (Excel 2016). This astonishing growth has seen some finance teams shrink, but the total number of accountants in employment increased by 2.4% from 2011 to 2016 (FRC Key Facts, 2016), proving the resilience of this profession at adapting to our circumstances. 

Other areas may not fare so well. Huge surges in unemployment were seen in the early 20th century, following the waves of the Industrial Revolution and the threats to the Empire, with some 20% of the UK population being out of work in the 1930s. Two World Wars removed the pressure on government to retrain the population in the last century, but, with competition facing the UK from global markets and increasingly automated processes, it could well become a significant issue in the 21st century for those with few skills to find employment in our brave new computerised world. 

We hope that you will enjoy this last report for 2017 – please email matthew.rideout@icaew.com or robert.russell@icaew.com if you have any comments or suggestions about this report or the faculty itself. 

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Robert Russell, Technical Manager, Business and Management Faculty