The UK’s tech sector grew at the slowest rate in almost four years in the third quarter as a global economic slowdown and domestic political uncertainty dented the industry, new research shows.
The tech sector was hit by a downturn in new work for the first time since 2012 during the three months to 30 September while new orders received by UK firms fell at the steepest rate since 2012, according to KPMG’s UK Tech Monitor report.
“Continued uncertainty in the UK amidst signs of weaker global economic growth is weighing on the performance of UK tech firms,” said KPMG UK vice chair Bernard Brown.
The sector’s loss of momentum was widely attributed to clients delaying decision making, the research found, while anecdotal evidence suggested Brexit-related uncertainty and concerns over US-China trade tensions dented sales during the quarter.
“Businesses are losing confidence and combined with activity expectations nearing lows last seen during the recession, it is easy to see why,” said Brown.
Reduced capacity and concerns about outlook led to employment across the sector flatlining during the third quarter, ending a decade of workforce expansion.
The industry was also hurt by a weaker pound, with exchange rate depreciation against the dollar helping to push up business expenses.
Optimism for the future of the tech industry remained weak, the research found.
Although business confidence within the sector picked up slightly during the quarter, the degree of positive sentiment remained close to a decade-low.
“Any positive growth forecasts cited for 2020 are often dependent on a clearer path to Brexit in the coming months, painting a pretty gloomy picture,” said Brown.