Close-Up: Live issue - How creative industries boost the bottom line.

A report recognising the economic benefits of advertising may help forge closer ties with government, Lucy Aitken says.

For anyone who insists that creativity and business are awkward bedfellows, The Work Foundation's latest report, Staying Ahead: The Economic Performance of the UK's Creative Industries, should be required reading. This 266-page tome, commissioned by the Department for Culture, Media and Sport (DCMS), positions the creative industries at the forefront of UK plc.

Staying Ahead describes 13 creative sectors - including advertising, television and publishing - as Britain's 'great unsung success story', employing 1.8 million people. The report estimates that, between them, these sectors represent a whopping 7.3 per cent of the UK's entire economic revenue, and pounds 4 billion in exports. Astonishingly, the UK's creative exports trounce those of the US, according to Unesco figures quoted in the report. In 2002, UK cultural exports were worth dollars 8.5 billion, compared with dollars 7.6 billion from the US.

The report positions the UK's advertising industry as second only to the US and superior to its European counterparts. But there are caveats to the flag-waving. First, there is advertising's tendency to fall victim to the boom-and-bust economic cycle. Second, there are rumblings about a skills shortage, particularly tech-savvy talent.

Staying Ahead attributes the success of the creative sectors to, among other factors, diversity in the UK and the rise of cities and regions such as Gateshead, Cornwall and Glasgow as cultural hubs. But, it warns, the cultural hegemony of the UK and the US may begin to wane as emergent superpowers such as China and India become more influential.

HOLISTIC STRATEGY

Six months of research - including lengthy summits with all 13 sectors - went into Staying Ahead. So how will the new-look DCMS, under the newly appointed culture secretary, James Purnell, use the report? A spokesperson says: 'It will form the basis of a Green Paper pencilled in for the autumn on the creative industries. It's too early to say how we're going to help the advertising industry specifically, but that will be in the paper.'