Tech companies in the UK received more venture capital investment in the first five months of this year than their competitors in France, Germany and China, according to government figures.
“President Macron is going to choke on his croissants this morning,” joked Chris Philp, the minister for the digital economy, as he announced the data at the start of London Tech Week.
As of May 31, more than 950 UK tech companies had provided £12.4bn in private funding, putting the UK second only to the US in seed investment.
The figures were released as the government launched its new UK digital strategy “to grow the economy and create more high-skilled, well-paying jobs by cementing the UK as a global tech superpower”.
At the same time, the need for economic growth has been underlined by the Confederation of British Industry (CBI) which has released figures showing that the UK economy contracted by a shock 0.3% in April.
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The CBI, the UK’s biggest employers’ group, lamented a ‘toxic recipe’ for growth and warned there was a risk the economy could be a ‘distant second’ to politics in the coming months due to the cost of living crisis, airports struggling to cope, expected national railway strikes and “Groundhog Day” battles with EU over Northern Ireland Protocol.
The data rings with widespread warnings that the economy is facing a prolonged period of weak growth, caused by a cost of living crisis this is only expected to intensify in the coming months as energy bills rise to further fuel inflation.
The forecast prompted the UK Chambers of Commerce and the Organization for Economic Co-operation and Development (OECD) to revise growth forecasts downward last week, with the latter warning that the The UK had the weakest outlook of any major economy except Russia.
UK digital strategy
Mr Philp said the government aimed to “increase the annual gross value added of the UK tech sector by £41bn over the next three years, creating 700,000 new jobs”.
This would be achieved through a number of complementary activities, including the new UK Data Reform Bill which, like Sky News indicated that it would bewas announced in the Queen’s Speech.
Sky News understands the publication of the government’s response to a public consultation on this data reform has been delayed as ministries scramble to determine what it will say.
The Department for Business, Energy and Industrial Strategy will publish a quantum strategy later this year, along with another semiconductor strategy paper which is expected to examine the UK’s position in the global market following a supply shortage.
Another white paper on AI (artificial intelligence) governance is also expected later this year, setting out a “lightweight approach to regulating AI” and encouraging innovation.
Some of the government’s ideas about AI could be challenged by new Information Commissioner John Edwards because he told Sky News earlier this yearthough companies are broadly supportive of measures that would allow them to use the data they process for customers to improve their products.
Mr Philp said the government would encourage UK pension funds to invest in Britain’s tech sector.
“There is a huge opportunity for UK financial institutions, particularly pension funds, to allocate far more capital to pre-IPO technology in a way that their North American cousins in America and Canada do. are already doing.
“They are massively under-allocated to technology [and so] UK pension funds and financial institutions are missing out on a phenomenal return opportunity.
“And if they allocated even a small potential percentage of their multi-trillion pound AUM (assets under management) to UK Tech, they would also be contributing – in addition to generating higher returns for their investors or retirees – to ignite a wave of innovation that will truly rival the West Coast.”
“So in the weeks and months ahead, I will be working with colleagues in government as well as in the technology and financial services industry to find ways to make this happen,” Philp added.
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