UK tech sector growth falls to two-year low, dragged by election jitters and Eurozone woes

Clara Guibourg
Follow Clara
"Looks like tech companies were just pressing the pause button" (Source: Getty)

The UK’s tech sector growth fell to a two-year low, with activity slowing in the second quarter dragged by election jitters and Eurozone woes.

Tech has been booming lately, and the latest figures mark three years of sustained business activity growth in the sector. But expansion is at its weakest pace since early 2013, according to a survey from KPMG and Markit.

It seems the Eurozone economic crisis has been a drag on the sector, but the general election in May has also weighed activity down, as companies delayed decisions until after the election.

Despite weakening growth, profitability continued upwards, with the strongest rate of improvement since 2014, and KPMG’s Tudor Aw, partner and head of the firm’s tech sector, called the figures a “game of two halves”:

The second quarter of 2015 showed yet another quarter of solid growth but the overall momentum weakened from peaks seen in 2014.

Spirits are buoyant in the tech industry, with 57 per cent expecting business activity to increase over the year ahead, and only six per cent forecasting a decline.

Half of the companies surveyed expected to create new jobs in the year to come, and one in three also expected capex to rise.

Happily, it looks like tech companies were just pressing the pause button as our survey also shows that despite this second quarter slowdown, tech companies are very upbeat about the future.

Related articles