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UK tech sector enjoys sharpest growth in nearly 10 years

Out-Law News | 30 Jan 2014 | 9:58 am | 1 min. read

Technology companies in the UK have enjoyed the "steepest expansion of business activity" for nearly 10 years, according to a new report.

The KPMG and Markit 'Tech Monitor UK' report showed that the rate of growth enjoyed by UK technology businesses in December 2013 was the sharpest since February 2004.

Activity levels in the industry were measured at "a healthy 61.0" last month, KPMG said in a statement. A score above 50 indicates growth. "The UK tech sector ended the year on a much firmer growth footing than it started, with a cyclical upswing first emerging in the spring of 2013 and picking up sharply since the autumn," it said. The index showed activity levels in the sector measured just over 50 on the index in the early months of 2013.

According to KPMG/Markit findings for quarter four 2013, UK technology companies enjoyed the fastest growth in profit margins for six years. Nearly half of all businesses in the sector (44%) intend to hire more staff over the next year, whilst just 7% said they expect to cut staff numbers.

"These figures prove once more that the UK tech sector is going from strength to strength," Tudor Aw, head of technology at KPMG, said in a statement. "The last quarter of 2013 saw the sector’s best growth performance in almost a decade, with a sharp increase in business activity, a rise in new orders and an increase in profitability despite higher costs. More importantly the sector showed again solid rates of job creation, well above the rates in other sectors of the economy."

Senior economist at Markit Tim Moore said that improving economic conditions in developed markets and "rising sentiment" among domestic businesses was behind the sharp growth enjoyed by UK tech businesses. He said the sector appears "well positioned to benefit from any increase in corporate spending patterns" during 2014.

"Overall, our figures highlight that the tech sector has established itself as a key growth engine within the UK economy over the past five years, meaning tech companies will surely play an important role in both boosting UK GDP and bringing down unemployment during the months ahead," Moore said.