KPMG has revealed that the UK tech sector enjoyed growth ahead of UK-wide sectors in the last quarter of 2014, avoiding the slowdown seen across the wider UK economy.
The KPMG/Markit Tech Monitor UK survey tracked the performance, confidence and employment outlook of UK technology business and illustrated that in the tech sector.
The report also found that the widest performance gap between the tech sector and the rest of the UK economy for almost six years was experienced in Q4 2014.
Much of the UK’s tech sector profitability is attributed to new business gains, the success of new products and slow cost inflation. At 55.8 in Q4, the index measure tech sector profitability was the second-highest for any quarter since Q4 2007.
The report also found that the tech sector’s job creation and new business trends exceeded UK-wide benchmarks by substantial margins in the final quarter of 2014. The cause of these trends is cited as being due to a wave of new product launches and greater investment spending which has resulted in hikes in employment.
A positive outlook for tech sector job hiring remains for the next 12 months, but organisations are less positive than those reported in mid-2014. This appears to be linked to a tempering of business confidence which broadly mirrors the UK’s service sector patterns.
Tudor Aw, partner and head of technology sector at KPMG, said: "This quarter’s report shows that the concerns highlighted in Q3 2014 about the sector entering into storm clouds have been misplaced. The previous survey showed that while tech sector business activity had been strong, the rate of expansion had slowed noticeably.
"Remarkably, the final quarter of 2014 marks a period of sustained job creation in the sector that now stretches to five years, something that should be celebrated loudly.
"In the run up to the General Election, the message from the latest Tech Monitor UK survey is clear; the tech sector remains a star performer of the economic recovery, and the future looks resoundingly bright in terms of industry growth and job creation."
With an eye on tech start-ups the report reveals that the number of new tech start-ups is rising and achieved a seven year high in 2014. With start-up numbers estimated to have risen by around 40% year-on-year the good news is that 82% of UK tech start-ups are surviving which is above the UK-wide survival trend of 76%.
Tudor Aw said: "The survey results echo my personal view that the UK tech start-up scene is vibrant and far outstripping other sectors. For those naysayers, it also shows that they have a higher survival rate than the UK average for all start-ups. I sense momentum is building and that it is only a matter of time when we begin to rival the west coast."
