Business activity growth in the UK technology sector has recovered to its fastest pace since the second quarter of 2018, while optimism fell to a 10-year low.
The strength of business activity rose to 54.4 in the first three months of 2019, up from 52.3 at the end of last year, according to data from KPMG. A reading above 50 shows an increase in overall business activity across the sector, whereas a reading below indicates a decline.
The technology sector outperformed the overall UK economy in the first quarter, which grew at its weakest pace for six years to reach 50.6.
Despite the improved growth, businesses became less optimistic of the year ahead as sentiment dropped from 69.8 at the end of 2018 to 65.6. Firms cited Brexit uncertainty, a possible skills shortage and the subdued global economy as causes for concern.
Separate data from Studio Graphene today revealed more than 90 per cent of tech startups plan to step up hiring within the next 12 months, and almost 70 per cent will expand into new overseas territories.
“The latest index ultimately outlines the resilience of the UK tech sector, and the strength of its ability to compete globally,” said Bernard Brown, vice chair at KPMG UK.
“While business may be concerned about global economic headwinds threatening customer spending, confidence is being buoyed by long term trends where we have a track-record for innovation.”
Studio Graphene founder and director Ritam Gandhi said “raising investment and hiring talent” were among the key concerns for tech firms. Only 11 per cent of businesses forecast a reduction in hiring this year, according to KPMG.
Chancellor Philip Hammond yesterday reassured business leaders that the UK’s fintech sector, the jewel of the technology industry, would not lose its access to global talent after Brexit.
“Even as free movement ends, Britain will remain open to talent from around the world,” he said, speaking at the Innovate Finance Global Summit in the City.
“We will still draw talent from across the EU – but from beyond it as well, making London and the UK a global magnet for tech skills.”
Gandhi added: “It’s vital both the government and private sector work together to ensure these obstacles are addressed and, ultimately, that Britain’s exciting early stage businesses get the support they need.”