The government is praising the UK’s IT sector despite widespread warnings that the economy faces a protracted period of poor growth due to an intensifying cost of living crisis in the coming months.
According to official data, British tech companies attracted more venture capital investment in the first five months of this year than their competitors in France, Germany, and China.
“This morning, President Macron will choke on his croissants,” said Chris Philp, the minister for the digital economy, as he delivered the figures at the start of London Tech Week.
As of 31 May, more than 950 British technology companies had raised over £12.4bn in private finance, placing the United Kingdom second only to the United States in terms of start-up investment.
The data was provided as the government unveiled its new UK Digital Strategy “to boost the economy and generate more high-skilled, high-wage employment by establishing the UK as a worldwide tech superpower.
At the same time, the Confederation of British Industry (CBI) released numbers revealing that the UK economy dropped by a shocking 0.3% in April, highlighting the need for economic growth.
The price of gasoline has surpassed £1.85 per gallon, and a business group has warned that “for many, this year will feel like a recession.” This is the most recent cost of living statistic.
The CBI, the largest employers’ group in the United Kingdom, bemoaned a “toxic recipe” for growth and warned that the economy could become a “distant second” to politics in the coming months due to the cost of living crisis, struggling airports, planned national rail strikes, and “Groundhog Day” battles with the EU over the Northern Ireland Protocol.
The findings corroborate widespread predictions that the economy faces a protracted period of poor growth due to a cost of living issue that is expected to worsen in the coming months as rising energy costs fuel inflation.
Last week, the British Chambers of Commerce and the OECD lowered their growth estimates in response to the forecasts, with the latter saying that the United Kingdom had the lowest outlook of any major economy save Russia.
British Digital Strategy
Mr. Philp stated that the government aimed to “increase the UK IT sector’s annual gross value added by £41 billion over the next three years, thereby creating 700,000 new employment.
The Department for Business, Energy, and Industrial Strategy will publish a Quantum Strategy later this year, and another strategy document on Semiconductors is planned to assess the United Kingdom’s position on the worldwide market in the wake of a semiconductor supply shortage.
A second white paper on AI Governance is anticipated to be released later this year, outlining a “light-touch approach” to regulating AI and promoting innovation.
As he told Sky News earlier this year, the new information commissioner, John Edwards, may challenge some of the government’s ideas regarding artificial intelligence, but businesses are largely in favor of measures that would allow them to use the data they process for customers to improve their products.
Mr. Philp stated that the government will encourage British pension funds to invest in the British technology industry.
“There is a tremendous opportunity for UK financial institutions, notably pension funds, to allocate significantly more capital to pre-IPO technology in the same manner as their North American counterparts already do.
“Pension funds and financial institutions in the United Kingdom are grossly underinvested in technology, so missing out on a great return opportunity.
And if they devoted even a small percentage of their multi-trillion pound AUM (assets under management) to UK Tech, they would help unleash a surge of innovation that will genuinely match the west coast, in addition to delivering superior returns for their investors or pensioners.
Mr. Philp continued, “In the coming weeks and months, I’ll be working with government colleagues and the digital and financial services industries to discover methods to make this a reality.”
