The number of new technology companies launched in the UK rose by 14% in 2018, marking another year of impressive growth in the sector, which is earmarked as a key pillar of Britain’s post-Brexit economy. Despite paling in comparison to 2017’s 60% increase, an analysis of the figures shows that importantly the growth is spread across the UK, rather than being monopolised by London.
With the deadline for Brexit negotiations rapidly approaching, businesses, politicians and citizens alike are still surrounded by uncertainties regarding the UK’s economic and geopolitical future. One aspect of Britain’s withdrawal from the EU that has consistently been talked up as a key pillar of post-Union life is technology. To that end, the UK Government is keen to foster creativity, with a growing emphasis on future inventions seeing the ushering in of incentives such as HMRC schemes, including Patent Box and the R&D tax credits regime.
The bid to boost creativity seems to be paying dividends, with a huge haul of new patents in the UK, and the country’s technology sector having boomed to a value of more than £180 billion last year. The explosive growth outpaced the sluggish UK economy as a whole, and will undoubtedly add to the emphasis placed on the tech sector in order to achieve a successful Brexit. Now, an examination of data from Companies House has revealed further evidence that this is the case.
According to research by professional services firm RSM, the UK’s tech startup scene is rapidly expanding. Last year alone there were 11,864 software development and programming businesses incorporated in 2018, up from 10,394 companies the year before. Of this leap of more than 1,000, London had the highest number of tech startups, welcoming 4,752, representing a 14% increase.
This was by no means isolated to the capital city, however, and attractive property prices and technological availability have also buoyed the launch of new tech-related businesses across the country. The South East of England followed London with 1,398 new firms, or a 2% rise.
There were 422 new software development and programming businesses incorporated in the East Midlands in 2018, up 22% from 345 in 2017, while the North West recorded 1,079 new tech firms – seeing the biggest rise of all at 48%. In fact, the number of tech firms ramped up across every UK region except Scotland – where the number of new firms fell from 2017’s figures by 4% to 444 – and the North East, where numbers remained flat at 175.
Commenting on the figures, RSM’s David Blacher said, “While the rate of increase didn’t match 2017 when we saw 60%, the numbers show that entrepreneurs are continuing to innovate and venture capital, private equity and traditional funders are still lining up to commit funds to the right projects. London and the south east still dominate, but we are also seeing encouraging signs of increased activity across the regions, particularly in the north west. Tax incentives such as the Enterprise Investment Scheme, R&D tax credits, video games tax relief and the Patent Box regime are all playing their part in helping to fuel this growth.”
In its own bid to foster further growth in the sector, RSM recently announced a partnership with Upscale 4.0 – a six-month accelerator programme delivered by Tech Nation. The new scheme will work to support the growth ambitions of successful UK tech-based scale-ups, and will see RSM work with Tech Nation to offer its latest cohort of 30 companies access to its expertise and experience.