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December 9, 2021

UK tech industry calls for more R&D support from government

UK tech companies expect sales, investment and headcount to grow in 2022 but call on the government to support innovation.

By Afiq Fitri

The UK’s technology sector is optimistic for 2022, with the majority of tech companies surveyed by industry body techUK expecting sales, investment and headcount to increase next year. The surveyed companies nevertheless called on the government to provider greater support for R&D and innovation, ahead of both improved training and access to oversea talent, as a way to help realise their ambitions. 

UK tech industry 2022


The continued impact of Brexit and Covid-19 are among UK tech companies’ chief concerns for 2022. (Image by gorodenkoff / iStock)

UK tech companies call for R&D support

techUK’s inaugural Digital Economy Monitor surveyed 51 tech companies, an even mix of large firms and SMEs. Nearly four in ten (39%) identified increased support for R&D and innovation as the most important way the government could aid the sector.

 

In its Innovation Strategy, launched earlier this year, the UK government pledged to increase funding for innovation to a "record" £22 billion, and to make it easier for SMEs to access capital markets. "Information asymmetries and coordination failures mean that smaller, earlier-stage businesses can be overlooked by investors, and IP-rich companies with substantial intangible assets can find it difficult to secure debt finance," the strategy conceded.

In an open-ended question, some respondents to the Digital Economy Monitor identified the need for government support in the "internalisation" of key technologies, techUK said. "Members emphasised the necessity of establishing a stronger framework for trading and sharing key technology such [as] radio spectrum and quantum technologies, and called for the government to work with other nations on digital regulatory cooperation."

techUK members also stressed the importance of the government improving the resilience of supply chains as a consequence of the global disruption caused by the Covid-19 pandemic. This could include "encouraging semiconductor investment in trusted partner nations (including the UK) and incorporating this into trade agreements".

Another key concern outlined in the survey was the impact of Brexit on businesses. Respondents indicated that the government should do more to improve the domestic talent and skills pool, as well as encourage highly skilled tech professionals to return to the UK from elsewhere. 

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The UK tech industry's outlook for 2022

Despite these concerns, the companies that participated in the survey indicated that their businesses have seen a relatively strong sales performance, with more than half saying their sales had increased in the last year. Businesses also expressed a strong sense of optimism in future investment plans in the UK, as well as increasing the size of their companies over the next year.

More than half said they intend to increase their investment plans, and nearly 70% plan to increase their headcount based on this year's performance. Only 2% of those surveyed said they plan to cut the size of their workforce in the near future. 

“Overall techUK members have weathered the impacts of a year of economic uncertainty. A pivot to digital across the wider economy and demand for investment in digital transformation and environmental, social and governance (ESG) services is driving demand in the sector, highlighting UK tech’s key role in supplying the productivity-boosting technology that will underpin the UK’s wider economic recovery,” said Neil Ross, head of policy at techUK. 

“However, access to talent and concerns around supply chain disruptions are preventing tech companies from expanding as fast as they could with negative consequences for the wider growth. Government and the sector will need to work together to unblock these bottlenecks if the UK wants to use tech to underpin the prime minister’s plans to build back better.”

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