Tech companies in the UK received more venture capital investment in the first five months of this year than rivals in France, Germany, and China, according to government figures.
“President Macron will be choking on his croissants this morning,” joked Chris Philp, the minister for the digital economy, as he announced the data at the opening of London Tech Week.
As of 31 May, more than 950 British technology companies had brought in £12.4bn in private funding, putting the UK second only to the US in terms of start-up investment.
The figures were released as the government launched its new UK Digital Strategy “to grow the economy and create more high-skilled, high-wage jobs by cementing the UK as a global tech superpower”.
At the same time the need for economic growth was stressed by the Confederation of British Industry (CBI) releasing figures showing that the UK economy contracted by a shock 0.3% in April.
The CBI, the UK’s biggest employers’ group, lamented a “toxic recipe” for growth and warned there was a risk that the economy would be a “distant second” to politics in the coming months because of the cost of living crisis, airports struggling to cope, planned national rail strikes and “Groundhog Day” battles with the EU over the Northern Ireland Protocol.
The data chimes with widespread warnings that the economy faces a prolonged period of low growth, caused by a cost of living crisis that is only forecast to intensify in the months ahead as energy bills rise to stoke inflation further.
The forecasts have prompted downgrades to growth expectations from the British Chambers of Commerce and the Organisation for Economic Co-operation and Development (OECD) last week, the latter warning that the UK had the weakest outlook of any major economy bar Russia.
UK Digital Strategy
Mr Philp said the government was aiming to “grow the UK tech sector’s annual gross value add by £41bn in the next three years, creating 700,000 new jobs in the process”.
This would be achieved by a number of complementary activities, including the UK’s new data reform bill which, as Sky News reported it would be, was announced in the Queen’s Speech.
Sky News understands the publication of the government’s response to a public consultation on this data reform has been delayed as government departments jostle to determine what it will say.
The Department for Business, Energy and Industrial Strategy will publish a Quantum Strategy later this year, with another strategy paper on semiconductors expected to review the UK’s position in the global market following a supply shortage.
Another white paper on AI (artificial intelligence) governance is expected later this year too, setting out a “light-touch approach to regulating AI” and encourage innovation.
Some of the government’s ideas around AI may be challenged by the new information commissioner, John Edwards, as he told Sky news earlier this year, although businesses are largely supportive of measures that would allow them to use the data they process for customers to improve their products.
Mr Philp said the government would be encouraging British pension funds to invest in the UK’s tech sector.
“There is a huge opportunity for UK financial institutions, particularly pension funds, to allocate a lot more capital to pre-IPO tech in a way that their North American cousins in America and Canada do already.
“They are massively under allocated to tech [and so] UK pension funds and financial institutions are missing out on a phenomenal return opportunity.
“And if they allocated even a small potential percentage of their multi-trillion pound AUM (assets under management) into UK Tech, they would also – besides generating higher returns for their investors or pensioners – they will also help unleash a wave of innovation that will truly rival the west coast.”
“So in the coming weeks and months, I’ll be working with colleagues in government and also the sector in the tech sector and the financial services sector to find ways of making this happens,” Mr Philp added.