The UK has been ranked the third most promising market for innovation, disruption and technology breakthroughs that have global impact according to KPMG’s 2018 Global Technology Innovation Report.
Around a fifth (19 per cent) of nearly 800 technology industry leaders surveyed globally named the UK as the third most promising market for tech breakthroughs behind China at 26 per cent and the US at 39 per cent, which was ranked number one for the second year in a row.
The report found that the UK tech sector had another strong year in 2017 despite macroeconomic headwinds, with businesses posting robust earnings growth and strong cash flows that have seen continued investment in R&D and acquisitions.
The UK sector saw a record level of venture capital investment of $4 billion, almost twice the level seen in 2016 and more than the combined investment seen in Germany, France, Spain and Ireland.
“The UK tech sector continues to go from strength to strength, with robust performance by mature tech companies and spectacular investment by VCs in emerging UK tech firms,” said KPMG head of technology in the North Graham Pearce.
“Innovation from the UK technology industries continues to drive economic value and this year’s survey underscores that point.
“There can be no room for complacency however and, in that context, it is heartening to see the government continue to state its view that the tech sector is at the heart of its industrial strategy.
“This will be vital to ensuring the United Kingdom stays at the forefront of emerging technologies and remains attractive.”
Technology industry leaders were asked which three cities, in addition to Silicon Valley/San Francisco, will be the leading technology innovation hubs over the next four years.
This year’s top three were Shanghai, Tokyo and joint third with London and New York.
London drew a strong 19 per cent response rate with its Silicon Roundabout despite Brexit concerns whilst tech hub rival Berlin drew eight per cent.
The capital’s vibrant tech scene continued to enhance its reputation as a magnet for both tech talent and investment among European cities with some $3.4 billion of venture capital investment – four times as much as the next largest city, Paris ($785 million) and more than the total investment in the next nine European cities during 2017.
Key factors behind the record level of investment in UK tech firms include availability of talent, London’s finance and services industry, multiculturalism, favourable time zone, language, stable legal system, fiscal/tax incentives, a mature ecosystem of advisors and first-class universities.
“Innovation has become decentralised globally with some cities making great progress while others still face macroeconomic and infrastructure challenges,” said Pearce.
“Many factors affect a city’s perception as an innovation hub, including favourable government policies and incentives, accelerators, tech parks, corporate investment, state-of-the-art infrastructure and, in all cases, at least a few highly successful and wildly popular success stories.
“London has all of the right ingredients to continue to lead the way as an innovative and supportive place to start and scale a business.”
More than 90 per cent of the global poll also said they would hire up to 100 employees in the near future, a sharp increase from 68 per cent a year ago.
A stronger economic climate was reflected in the global start-up survey responses and in their optimistic plans to hire new employees, although one third indicated they won’t be hiring over the next 12 months.