Tech Nation 2018 report: UK tech is surging past the rest of the economy amid Brexit worries
The digital tech sector in the UK is booming, employment is high and new tech hubs are cropping up across the nation, according to Tech Nation’s 2018 report.
According to the findings, the UK’s digital tech sector grew 2.6 times quicker than the rest of the economy between 2016 and 2017, with the industry now being worth nearly £184bn.
The report also found that digital tech companies’ turnover grew by 4.5% between 2016-17, whilst UK GDP grew by 1.8%. Digital also beat the non-digital sector for the fourth consecutive year.
Employment and funding
As well as money, job opportunities in this field are reportedly plentiful, too – tech employment is rising at five times the rate of the rest of the economy.
2017 was also a great year for funding. British digital tech companies raised £5.8bn in venture capital investment during the year, almost double the previous year. The 10 biggest rounds totalled £1.9bn, including “mega funding” rounds such as gaming firm Improbable raising £370m from Japan’s Softbank, food delivery service Deliveroo raising £284m and mobile network Truphone raising £249m.
Notable acquisitions made last year include Matchesfashion.com being sold to a private equity investor for almost £750m and Leeds-based CallCredit being acquired by TransUnion for £1bn.
UKTN’s own investment tracker shows that £1.4bn has been invested in UK companies so far this year. Last year’s total reached £4.13bn.
Secretary of State for Culture, Media and Sport Matt Hancock said: “Tech Nation 2018 highlights the extent to which the digital tech sector is providing new energy to the whole economy. The sector is growing faster and providing more high-paying jobs than the wider economy.
“This is a huge success story for the UK but we also want to make sure that the benefits of the digital tech boom are reaching every corner of the UK, so that we can build a Tech Nation that works for everyone,” he added.
The report also shows how the UK is succeeding in establishing itself as a leading tech hub. It found that Silicon Valley is the only tech ecosystem which is more connected than London; based on the percentage of entrepreneurs from other countries who report a significant relationship with two or more entrepreneurs in a given ecosystem. The UK also invests the third most capital in digital tech companies, lagging behind the US and China.
Regional differences
But, how does this picture differ across the nation? While London still receives the most investment and is home to the most startups, the report also reveals that smaller population centres are attracting more digital tech businesses.
The report pegged 16 towns across the UK as potentials for new tech hubs, because of their above average levels of tech employment. These include Reading, Basingstoke, Burnley, Slough and Heathrow, as well as Telford, Cheltenham, Stafford, Huntingdon and Swindon.
Different cities are also developing specialisms. For instance, blockchain is a popular in Manchester; shown by analysis of Meetup data which found there were 151 meetups and nearly 62000 members. Perhaps unsurprisingly, AI is a key aspect of the tech sector, accounting for 16% of the top 400 UK tech meetups.
Eileen Burbidge, partner at Passion Capital and Chair of Tech Nation, said: “From FinTech to HealthTech, self-driving cars and artificial intelligence, the UK’s digital tech sector is having an impact on every aspect of our daily lives and economy.
“Tech Nation’s survey of the industry shows that confidence and optimism is high, but it is important for us to keep supporting this sector and give British companies the best chance they can to grow and scale,” she added.
A diverse workforce?
The report shows there is some progress being made in terms of diversity, but there is still some way to go. Women are still grossly underrepresented; only 19% of the digital tech workforce is female, compared to 49% across all UK jobs. On a more positive note, on average, 15% of those in digital tech jobs are of black, Asian and ethnic minority (BAME) backgrounds, compared with the 10% average across all UK jobs.
The stereotype that tech is the territory of millennials is also misplaced as 72% of UK digital tech workers are, on average, over 35.
Brexit is often cited as a potential threat to the tech sector, and a survey of 3,428 people involved in digital tech revealed that the only places in which Brexit is cited as a top three challenge are Cambridge and London. In fact, according to the report, tech communities across the UK are highly optimistic about the growth prospects for digital tech companies in their local area, both in terms of scale and number of businesses.
Still, some problems are broadly consistent across the nation. Some 83% of clusters are affected by access to talent, making that the most common challenge. Access to funding (49%) and bad transport links (29%) make up the next two setbacks.
Still, despite some problems, the tech sector feels optimistic about the future. Over 70% of respondents think the number of digital tech businesses in their local area will rise over the next 12 months and over 90% think that the scale of digital tech businesses in their local area will either expand or stay the same.
Gerard Grech, chief executive of Tech Nation, said: “Tech Nation 2018 is the first major milestone of Tech Nation, the organisation now working across the country to build networks that support ambitious entrepreneurs and shine a light on the achievements of our tech sector.
“The UK’s tech sector is growing almost three times faster than the rest of the economy. What started as Tech City is increasingly Tech Nation. London is the world’s second most connected hub after Silicon Valley. We need to make the most of that, as our new relationship with the EU will undoubtedly force us to be even more adaptive, innovative and ambitious,” he concluded.