The UK tech sector has been surging over the past two years, with large gains in revenue, profit, capital expenditure (capex) and investment. In the second quarter this year, it hit its first minor speedbump, with an overall slowdown in growth.
UK audit firm KPMG revealed the slowdown in a financial report published earlier this week. In the report, UK tech firms said the main reasons for the slowdown were the results of the General Election and uncertainty over the UK’s position in the European Union.
Both of these factors have stopped UK tech firms from investing heavily in the future, although 57 per cent of businesses expect an increase in activity, and 49 per cent expect a rise in payroll numbers over the next year.
“The latest Tech Monitor report can be summarised effectively as a ‘game of two halves’, said Tudor Aw, head of technology at KPMG. “The second quarter of 2015 showed yet another quarter of solid growth but the overall momentum weakened from peaks seen in 2014. This reflected the impact of a number of uncertainties, most notably the General Election and euro area uncertainties.”
The UK tech sector also noted another rise in profit, with a rise of 1.7 in the profit index to 54.3. This is the strongest rate of improvement since 2014. 73 per cent of businesses expect a growth in profit over the year, with only two per cent expecting a downturn.
Overall, the UK tech sector appears to be fine, but questions on how the election and leave of the EU will impact business remain. Similar to China, the government is heavily impacting growth and investment, due to uncertainty of conditions in the next few years.