Business growth in the UK technology sector fell to its weakest level in three years at the end of 2018, according to a new survey conducted by accountancy firm KPMG.
KPMG’s latest UK Tech Monitor report found that business activity growth for technology businesses slowed in the final three months of 2018, its slowest rate of growth since the end of 2015.
KPMG’s report also revealed that operating expenses continue to rise sharply at UK technology businesses, although expenses did not rise as highly as the increase seen in 2017.
Companies also expressed concern about ongoing trade issues, with uncertainty caused by Brexit leading to some businesses saying that they had delayed or held back investment in their business.
The accountancy firm’s index for business activity growth in technology came in at 52.4 for the end of 2018, but remained above the 50.0 value which would have signalled no change.
The sector has continued to see growth since 2012, but the latest value dropped below the 54 figure seen in the third quarter of 2018.
However, the report found that the UK’s technology sector is far more upbeat than the rest of the economy regarding the business outlook in 2019.
Almost half of the businesses in the report said that they expect to increase their number of staff this year, with fewer than 10pc of respondents saying they expected their total number of employees to fall.
While business activity growth has slowed in the technology sector in recent months, investment in the sector has remained strong.
A report released in December by Tech Nation and Dearoom found that the UK technology sector continued to outperform the rest of Europe in 2018 by attracting $7.9bn (£6.1bn) in venture capital investment.
Technology start-ups in the UK accounted for more than a third of sales, initial public offerings and mergers across Europe, with $40bn worth of exits being made in 2018 alone.
Bernard Brown, vice chair at KPMG UK said that “our survey reveals that political uncertainty has dented client confidence contributing to a slowdown in growth at the end of last year.”
“But, buoyant staff hiring and capital expenditure plans are still in place for 2019. This confidence is reflected in the statistic that almost 50% of UK tech firms intend to add jobs over the next year, whilst many traditional manufacturers are considering moving jobs offshore,” he added.
