Business confidence in the UK IT and communications sector has steadily increased in the past year, and is now significantly higher than confidence in the UK economy as a whole.
Confidence in the sector now stands at +30.8, notably higher than the +24.0 reading for the UK economy, according to data from the UK Business Confidence Monitor, compiled by ICAEW and Grant Thornton.
This quarter, the tech industry has reported a 3.8 per cent growth for the last 12 months, compared to a predicted 1 per cent rise in overall UK economic activity.
Significantly stronger growth of 7.8 per cent is expected over the next 12 months, suggesting that the tech sector could be set to help drive UK economic recovery.
"The buoyancy of the technology sector over the past year has been very impressive. Along with renewed interest in mergers and acquisitions (M&A) in the tech space, liquidity is returning in the capital markets and banking appetite for technology assets with recurring revenues is really strong at the moment," said Andy Morgan of Grant Thornton UK.
"The sector has been given some substantial impetus by government initiatives, with incentives for research and development, patent box relief, entrepreneurs relief and other measures designed to encourage further growth. The upturn in confidence in the sector should flow through into growth performance in the short to mid-term."
Exports of IT and communications services have also experienced steady growth over the past 12 months, surpassing the economy-wide average. This momentum is set to carry on throughout the next year.
A continued increase in UK tech jobs is also expected over the next year, with hiring projections sitting second only to the construction sector.
"The [tech] sector certainly has an opportunity for export led growth, particularly as the economies of key trading partners improve," said Nick Watson, head of technology and communications at Grant Thornton UK.
"Similarly, with business confidence returning more broadly across the domestic and some international economies, we're likely to see more demand for IT products and services, as many of the corporates who have built up their cash holdings in recent years consider previously deferred IT investments again."