Is the future of British tech in London?

It hasn’t been a bad month for the British tech scene. Business activity is growing at its highest point since the financial crash, and half of British tech firms are expecting to increase staff in the coming year, according to a report by professional services company KPMG and research firm Markit.

Tim Moore, senior economist at Markit, lists two key forces likely to benefit in tech this year: "rising business investment as confidence in the recovery takes hold and improving household spending power as wages finally start to climb more quickly than consumer prices".

The news coincides with a rosy picture of the British economy, with things mostly set to improve. London may only be Europe’s second tech hub this year, coming second to Munich, according to the EU Commission, but things rarely remain still in business. As the economy picks up surely London is on course to dominate European technology?

Well, perhaps not. Even Tech London Advocates (TLA) believe trouble is on the horizon. In a survey of their membership, the tech coalition reported that 43% said difficulty recruiting was likely to damage growth. Of particular concern are the stringent visa controls for those outside of the EU, making skilled workers from America far more difficult to lure across the pond.

Russ Shaw, founder of TLA, called on the government to encourage education in STEM (science, technology, engineering and maths)whilst reviewing migration laws to entice more talent from abroad, in comments echoed by KPMG’s head of technology Tudor Aw following publication of the Tech Monitor report.

"Our data also shows the positive impact the sector has on the UK’s economic performance as a whole and the important role UK tech companies up and down the country play in the burgeoning recovery," Aw said. "It is time the sector received the recognition and support it deserves."

Aw’s remarks were not merely directed towards London, but the whole of the UK. London has long stolen the spotlight within British tech, a notion captured in the nickname Silicon Roundabout for the start-ups around Old Street. Yet there are those who believe that the capital should no longer command such influence within the industry.

Sean Duffy, managing director of technology at Barclays, believes the premium of office space and high cost of living in London is sending people to the regions. Tech is probably in a better position than many industries to spread across the country, with Cambridge University best placed to usurp Old Street, having come fifth place in the EU Commission’s report.

"It is the universities that often act as the catalyst for innovation and have played key roles in developing regional technology hubs," Duffy said. "There is now an opportunity to create a network of highly connected, highly specialised regional tech hubs in the UK that take advantage of local talents and resources."

These are the problems businesses may increasingly be faced with over the next few decades, as workers willingly forego the efficiencies of centralisation in favour of a higher standard of living, and politicians pursue more parity in the regions. London is likely to remain in pole position for some time, but whether it will lead the pack forever is a matter yet to be decided.

Type: White Paper


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