Between 2010 and 2019, the UK tech sector’s contribution to our economy grew by 25%. Since 2019, this number just keeps on getting better. UK Tech now betters the economy by £150bn every year.
On top of this, in those same 9 years, jobs in the sector have increased by a third. We now know that over 1.7 million people across the UK have a job within the tech sector.
Across the UK, businesses across every sector are embarking on and extending their digital transformation efforts. It’s evident that the growth of UK tech is not just good for the sector itself, it’s essential for the wider economy and society. More tech companies coupled with more tech professionals equate to an increase in digital tools and services we can all use and enjoy.
2022 was a mixed bag for the UK tech sector, and investment in it. The year began well, but investment in UK tech waned in the final 6 months. Financial uncertainty and rising interest rates created hesitancy among investors who were more cautious and less willing to part with their cash.
Despite this, UK tech businesses raised £24bn in 2022 positioning themselves above the rest of Europe and underlining their place as THE tech hot spot of Europe.
The wider economic position also created some other issues for UK tech. The energy and cost of living crisis have caused some major tech firms to make redundancies, while the well-documented shortage of tech talent has halted the efforts of others to scale and grow.
Cuts to funding.
Cuts to key government funding have also limited support within the sector. The value of the government’s UK research and development tax credit has been reduced and the Help to Grow: Digital programme has been cancelled.
Will the Spring Budget be a springboard for UK tech?
To make sure the UK remains a global premier technology destination, the chancellor needs to use his March announcement to deliver support for UK tech. It is an opportunity to show the world that our government believes in the sector and its potential to boost our economy.
What could happen?
Being led by Sir Patrick Vallance, the review of regulatory reform offers quick-win opportunities. Key and emerging parts of the tech sector such as drones, telecoms, and space technologies are all set to benefit.
Reformations may also be made to the UK’s R&D tax credit regime. Refocussing the credit toward research-driven organisations will send out positive signals and instil some confidence in the sector. A recent survey of investors that provide capital to VC firms has shown that they plan to increase their allocations for UK tech in the next year. There will still be plenty of money for startups despite the difficult and uncertain economic landscape.
It will also underline that the prior reduction in government support was not the beginning of a trend and that there is still plenty of belief in the UK tech scene.
The shortage of tech talent is also a problem that the government needs to address with the help and support of UK tech firms and educational organisations. We need robust schemes and structures in place to ensure that there’s a sustainable pipeline of digital professionals equipped with the skills to uphold the UK’s position as a true tech hotspot.
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