UK tech sector continues robust growth, says report
British tech industry growth continued to gather momentum in the final quarter of 2014.
Business activity in the UK’s tech sector continued to experience strong growth in the final quarter of 2014, despite less than favourable global economic conditions, according to the KPMG/Markit Tech Monitor survey.
The reports headline Tech PMI Business Activity Index rebounded to 59.8 in the final three months of last year, up sharply from 55.7. Anything above 50 indicates expansion in the industry, so these latest figures are showing the UK’s tech sector is thriving.
Furthermore, looking ahead for this year the proportion of tech sector optimists exceeds the pessimists by more than seven-to-one.
“This quarter’s Tech Monitor report shows two fantastic pieces of news. Firstly, the concerns highlighted in our previous survey about the UK Tech Sector entering into storm clouds have been misplaced. Secondly, the UK Tech Startup scene is not only growing, but survival rates are impressively high,” said Tudor Aw, technology sector head at KPMG.
Tech sector job growth accelerated in the fourth quarter of last year, marking an impressive five-year period of sustained growth, which is the longest recorded period of sustained job creation since the survey began in 2003.
Survey respondents cited new product launches, strong sales growth, improving underlying business conditions and rising R&D spending as key drivers of staff recruitment.
Business activity expectations in the coming year continue to be largely positive, with the proportion of tech sector optimists (53 per cent) far outweighing the number of pessimists (7 per cent).
The report notes that while some darker clouds may be gathering over the wider UK economy, companies in the tech sector continue to report “especially positive intentions in terms of staff recruitment, planned R&D expenditure and expected pipelines of new work in 2015”.
The number of new tech startups hit a fresh seven-year high in 2014, meaning that levels have now recovered to those seen before the global financial crisis. The report suggests that a startup numbers has been rebounding since 2010, which coincides with a strong improvement in business conditions and new policy initiatives that were designed to boost tech investment.
Another positive is seen from the tech sector survival rate, which estimates that tech companies have a two-year survival rate of around 80 per cent, which is significantly higher than the UK average (74 per cent).
Tudor Aw noted that the results were in line with his thinking and that UK’s tech startup scene is “vibrant” and far outstrips the other sectors.
“It also shows that they have a higher survival rate than the UK average for all start-ups. I sense momentum is building and that it is only a matter of time when we begin to rival the west coast,” he added.
Certainly, it appears that the future of the UK’s tech sector is extremely positive, and it will continue to be a shining example in the UK’s economic recovery. For the full report from KPMG/Markit please click here.