People who were worried about the tech space in the UK after the Brexit vote may be able to sleep a little sounder with news that tech investments are staying steady and even growing at a good pace. It’s what Theresa May has called a “great British success story.”
A recent report found that investments in digital businesses grew through Britain during 2016. Since 2011, the UK has attracted £28 billion in tech investments, the most in Europe, compared to £11 billion in France and just over £9 billion in Germany.
The digital economy is growing at double the pace of the economy as a whole and now contributes about £97 billion to the total UK economy every year, up £30 billion in just the last five years. Jobs in the space are also growing at twice the pace of jobs in other areas and enjoy a higher salary than positions in other industries.
“From analysts to web developers to software architects, these pioneers of our digital economy are at the forefront of a great British success story,” May said.
Throughout the region, areas of tech specialities have popped up, with London and Cambridge flourishing in artificial intelligence and Edinburgh leading the way in data analytics.
According to the report, the highest concentration of growth in tech companies is in London, Bournemouth, Poole, and Newcastle. Although some companies admit they are slightly hesitant to continue to invest after Brexit, the framework and infrastructure is in place so that they feel their investment will be put to good use right away.
May has reiterated her plans to work closely with the tech industry and to make it a priority as the UK moves out of the EU. A strong tech sector could also be helpful to May as she leads the charge through Brexit negotiations.
“We will expand the scope of our digital tech industries, funding artificial intelligence, robotics, 5G, smart energy and more,” she said.
However, that isn’t to say that the sector is immune from changes as Brexit looms. A separate report found that one in ten London tech companies have had investors withdraw since the Brexit vote, and a survey found that more than 50% of people think leaving the EU will hurt the UK’s position in the tech industry. The cost of a Tier 2 visa, which many firms use to bring in employees from outside the country, will double after the UK leaves the EU.
“There are some big challenges ahead of the British digital tech sector, not least finding the skilled staff to continue growing at this rate, as the UK prepares to leave the EU,” said Wendy Tan White, general partner at Entrepreneur First. “Whatever happens in the coming months, the UK must continue to be an attractive place for investors to want to put their money, prioritizing support and infrastructure for the start-up economy.”
Changes to the industry and the region could be especially dangerous to smaller firms, who often have to fight more for talent. One of the greatest fears is that the smaller firms won’t be able to grow their employee bases fast enough to keep up with demand and investor contributions. The government has agreed to help by increasing training in the tech areas, but it could take years to see the fruits of that labor.
The continued growth of Britain’s tech sector is one of the region’s biggest success stories in recent years, but it is about to face its biggest test yet as Brexit gets even closer. If the track record holds true, the industry should continue to grow at a good pace.