General election drags on UK tech growth

UK tech sector experienced slowest expansion rate since Q1 2013, according to KPMG

Uncertainty around the general election and the eurozone crisis sparked the most significant deceleration of the UK tech sector in Q2 2015 for more than two years, according to a new report.

Although the second quarter marked three years of continued expansion in the sector, it displayed the slowest growth rate since Q1 2013, according to the latest KPMG/Markit Tech Monitor UK survey.

Respondents said uncertainties around the UK general election had led to delayed purchases, while the eurozone crisis dragged down sales volumes and business wins.

However, profit in the sector remained on the up, with KPMG's index measure rising to 54.3 per cent compared with 52.6 per cent in Q1 2015, the strongest rate since the end of 2014.

Some 57 per cent of tech companies have high expectations for the year ahead, with only six per cent forecasting a decline.

Forty-nine per cent reported a rise in payroll numbers over the year ahead, which the report says indicated the strongest employment projections throughout the UK tech sector since October 2009.

Tudor Aw, partner and head of the technology sector at KMPG, said: "The latest Tech Monitor report can be summarised effectively as a 'game of two halves'. The second quarter of 2015 showed yet another quarter of solid growth but the overall momentum weakened from peaks seen in 2014.

"Happily, it looks like tech companies were just pressing the pause button as our survey also shows that despite this Q2 slowdown, tech companies are very upbeat about the future.

"This is consistent with what I am hearing from tech companies, that business activity is coming back strongly post-election uncertainties and that there are tailwinds from benign economic conditions, increasing maturity of cloud solutions and customer needs to address their IT infrastructure as growth picks up," he added.