UK tech sector growth cools to slowest pace since 2015 amid political uncertainty

Growth in the UK tech sector cooled to its slowest pace in three years in the final quarter of 2018 as political uncertainty and global trade frictions dented industry confidence.

Tech companies also reported the sharpest fall for seven years in backlogs of work, suggesting a lack of new work to replace completed projects at the end of 2018, according to the latest KPMG tech monitor index.

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The index returned a value of 52.4 for the three months, down from the score of 54 recorded in the previous quarter. A figure greater than 50 reflects that there is growth in the sector.

Bernard Brown, vice chair at KPMG UK said that despite the reduction in growth “buoyant staff hiring and capital expenditure plans are still in place for 2019”.

“This confidence is reflected in the statistic that almost 50 per cent of UK tech firms intend to add jobs over the next year, whilst many traditional manufacturers are considering moving jobs offshore,” he added.

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Some tech companies responded to the challenging environment by putting the brakes on hiring at the end of 2018 but employment continued to rise in the sector overall.

Increased wages coupled with exchange rate pressure as sterling fell against the US dollar caused costs to increase over the period.