UK tech sector optimism hits seven-year high

Tech companies are more optimistic about near-term growth than any time in the last seven years, according to new research from KPMG which reveals that job creation in the sector is nearing a two-year peak.

The accounting company’s latest quarterly index of UK tech industry performance found that the sector is showing the strongest optimism towards the 12-month business outlook since the second quarter of 2014.

This is due to strong confidence that businesses will rebound swiftly after a difficult 13 months following the start of national lockdown restrictions in the UK. Brexit-related uncertainty among clients is also beginning to ease.

This is resulting in a new hiring spree among tech companies, with the fastest rise in employment since the second quarter of 2019.

Commenting on the findings, KPMG UK chair Bina Mehta said that “the pandemic has placed a huge focus on the importance of technology in our daily lives”.

“The move towards new remote and hybrid working arrangements, new spending priorities for businesses around IT infrastructure, automation and the huge shift to online retail, are likely to provide a long-term boost to sales and investment in the tech sector. Tailwinds from new trade arrangements, favourable global demand and the reopening of the UK economy will both help our vital tech sector to gain speed in the second quarter of 2021,” she added.

According to Mehta, the UK tech industry is “fast-tracking plans to get back to growth”, due to the country being “in phase two of the government’s roadmap to recovery and businesses starting to adjust to regulatory changes and supply chain issues post Brexit”. She also described the sector as “a vital economic contributor and driver of employment in the UK” that “will play a key role to drive the country’s post-pandemic recovery”.

“An acceleration in jobs growth to its fastest for almost two years provides a clear signal that tech companies are confident about future workloads and expect to receive a boost from improving UK economic prospects," said Mehta.

"The successful vaccine rollout and optimism around corporate technology investment were key factors helping to drive up business confidence to a seven-year high in the first quarter of the year."