UK’s digital tech sector accelerates faster than the rest of the economy
Register for free to receive latest news stories direct to your inboxRegister
The UK’s digital tech sector continues to accelerate faster than the rest of the economy, according to a landmark ‘state of the nation’ report.
Turnover of digital tech companies grew by 4.5% between 2016 and 2017 compared to UK GDP, which grew by 1.7 %over the same period, according to official figures compiled by Tech Nation.
And that means the tech sector grew 2.6 times faster than the rest of the economy. At the same time, the number of jobs in digital tech rose at five times the rate of the rest of the economy, demonstrating how it is one of the best performing sectors in the UK.
Tech Nation 2018 is published by Tech Nation, a new voice for the UK’s fast-growing sector. Launched in April its aim is to build on the past work of Tech City UK and Tech North to make the UK the best place in the world to imagine, start and grow a digital tech business.
Its 2018 report highlights the rise of ‘silicon suburbs’ and tech towns across the UK –communities where the digital tech sector is growing in urban areas not usually associated with startups and tech businesses.
These smaller population centres are attracting more digital tech businesses, just as the whole UK tech sector widens the growth gap between itself and other sectors. A total of 16 of these tech towns are named in the report, including Burnley.
Eight cities are also showing above average tech employment, demonstrating how the UK’s tech boom is spreading beyond locations like Manchester where it already well established. These include York.
Sheffield is also getting noticed. Aldo Monteforte, founder of The Floow in Sheffield said: “The Sheffield City region
has traditionally been associated with heavy industry but there is a real buzz around the startup community now and what’s really exciting is that when you go to the pub or to the football people are actually starting to talk about career opportunities in tech that are available right on their doorstep.
“Sheffield, together with other fast-developing Northern cities like Manchester and Leeds, is the home to many successful global companies and is benefiting from access to some great talent and a genuine entrepreneurial culture that’s fuelling strong growth momentum.”
The report outlines that Sky Betting and Gaming has continued to invest in the Yorkshire region, creating 230 more jobs in 2017/18. The firm is one of two Yorkshire-based tech firms classed as unicorns. The Leeds Digital Festival has become the largest digital festival in the North. Celebrating all things digital, it expanded again in 2018 to include 170 events, 650 speakers, 75 venues and 20,000 attendees.
The report also reveals that international investors flocked to fund UK-based firms last year. British digital tech companies raised £4.5bn in venture capital investment, according to Pitchbook figures, almost double the previous 12 months.
Notable exits it highlights include Leeds-based CallCredit, acquired by TransUnion for £1bn. In total the UK has seen £42bn venture-backed exits between 2013 and 2017.
The report says that the UK is third in the world for total capital invested in digital tech companies, behind the US and China.
Meanwhile, the report said that Hull’s traditional businesses continue to innovate through tech. One good example is Arco, prominent safety equipment provider, which was founded 133 years ago in Hull and employs 1,700 staff. The company is currently investing heavily in new digital capability and will house a 50-plus digital team at C4DI to work on its £30 million digital first transformation programme.
The Ron Deering UTC opened its doors in September 2017. The new school focuses on digital tech and mechatronics and is sponsored by local businesses such as KCOM, ensuring that its curriculum is fit for business.
Cheshire-based The Hut is also highlighted as one of the UK’s fastest growing tech companies by Tech Nation.
Tech Nation 2018 also reveals that the digital tech sector’s workforce is older than commonly perceived and more ethnically mixed than the average UK workplace.
However, it adds “the dearth” of women in the digital tech sector remains a factor, though it is beginning to be addressed by activities to tackle the recruitment and retention of women.
On average 72% of UK digital tech workers are over 35, however just 19% of the digital tech workforce is female, compared to 49% across all UK jobs.
The report also includes a tech ‘community’ survey which revealed Brexit is less significant for companies outside London, which historically have relied less heavily on overseas talent to fill job vacancies.
Tech communities across the UK are highly optimistic about the growth prospects for digital tech companies in their area, both in terms of scale and number of businesses
Commenting on the report Steve Pearce, chief executive of TickX in Manchester, said: “We know that from Manchester we can build a business that can serve people across the world. Tech is not just a trend in Manchester’s commercial history. It’s rooted in our heritage and the universities here and it is bringing opportunities and great jobs to people in many disciplines.”
Gerard Grech, chief executive and co-founder of Tech Nation, added: “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.”
Simon Calver, head of investments at BGF Ventures, which has offices in Leeds and Manchester, said: “Tech Nation 2018 confirms what we are seeing as we cover the country looking for companies to invest in.
“The entrepreneurs that we have invested in and are working with are hungry to create world-changing companies. I have no doubt that the UK can support several truly international tech hubs and Tech Nation will help to make that dream a reality.”
The UK’s tech community is highly connected
Meetup.com data shared within the report reveals that there are 3,527 UK tech group with 1.6 million members across 283 locations.
The report says these tech meetups are inclusive and collaborative – 91% of UK groups are open for all to attend.They highlight emerging trends, for instance, in Manchester a mass of groups are discussing new technologies like Blockchain.
May’s rallying call
The digital tech sector has the potential to boost communities and economies across the UK, according to Theresa May.
And that is the thinking behind making tech a core component of the emerging Industrial Strategy.
In a forward to the new Tech Nation report, the Prime Minister said: “Over the last year, the performance of the United Kingdom’s digital tech sector has been world-leading, with British firms attracting more capital than any other European country.
“Our great strength in technology and innovation, built on the UK’s excellence in R&D and creative thinking, is demonstrated by the breadth of tech activity right across the country, and the powerful networks being forged by the next generation of entrepreneurs.”
May added: “In line with the wider aspirations of the industrial strategy to promote economic growth and prosperity across the whole UK, I want to see our tech sector realise its huge potential to boost communities and economies across the entire nation.
“Every entrepreneur, every innovator and every employer in the tech sector and beyond can help make this happen.”