UK Tech sector growth is the weakest for three years, according to the quarterly UK Tech Monitor report by KPMG and IHS Markit.
The report cites the main reasons for the UK Tech sector growth being at its weakest for three years as global trade issues and uncertainty over Brexit. The report states: “The tech sector experienced a difficult end to 2018, as business activity growth eased to its weakest for three years and new work remained subdued. Global trade frictions and Brexit-related uncertainty were widely reported to have acted as a headwind to client spending.”
Some of the key findings from the report include:
- UK tech companies indicate a loss of momentum in the final quarter of 2018;
- Business activity has expanded at its slowest pace since quarter 4 of 2015; however
- The tech sector has a better business outlook for 2019 than the rest of the UK economy.
The future of the UK tech sector
The report identifies that while political uncertainty and global trade frictions have had a negative impact on client confidence in the sector, buoyant staff hiring and capital spending plans are still in place for 2019. Despite the hit to growth, Tech sector employment plans are far stronger than the UK private sector as a whole, which have been reported as the lowest since quarter 1 of 2013.
Bernard Brown, the vice chair of KMPG UK, commented on the future of the UK tech sector: “Our survey reveals that political uncertainty has dented client confidence contributing to a slowdown in growth at the end of last year. But, buoyant staff hiring and capital expenditure plans are still in place for 2019. This confidence is reflected in the statistic that almost 50% of UK tech firms intend to add jobs over the next year, whilst many traditional manufacturers are considering moving jobs offshore. This demonstrates the strength and resilience of the UK tech sector in the new digital economy.”