UK tech companies are now more optimistic about their short-term growth prospects than at any time over the last seven years, according to new figures published today.
Firms in the burgeoning British tech sector reported strong confidence that business activity will bounce back strongly after the latest national lockdown and as Brexit-related uncertainty among clients begins to ease.
As a result, companies expanded employee numbers in the first quarter with the pace of staff hiring the quickest for almost two years, according to KPMG’s quarterly tech monitor.
However, it was not all plain sailing for tech firms. Business activity dropped modestly in the first quarter, due largely to the latest coronavirus restrictions.
There was also a slight drop in new orders due to Brexit disruption, while rising costs for staff, transportation and electronic components led to the sharpest increase in input prices for the sector for nearly four years.
But as tech companies looked towards future growth, employment rose by its fastest rate since the second quarter of 2019, while output growth projections were at their strongest since the second quarter of 2014.
Optimism was higher than in all other parts of the UK private sector apart from hotels and restaurants, many of which have not been trading at all for the last nine months.
“With the UK now in phase two of the government’s roadmap to recovery and businesses starting to adjust to regulatory changes and supply chain issues post Brexit, the tech sector is fast-tracking plans to get back to growth,” said Bina Mehta, chair of KPMG in the UK.
“An acceleration in jobs growth to its fastest for almost two years provides a clear signal that tech companies are confident about future workloads and expect to receive a boost from improving UK economic prospects.
“The successful vaccine rollout and optimism around corporate technology investment were key factors helping to drive up business confidence to a seven-year high in the first quarter of the year.”