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  • Innovation & Transformation
    • Digital Adoption

The UK’s big reputation for tech

  • Article

There are many reasons the UK does so well in the tech economy. From world-leading universities to supportive government policies, entrepreneurial spirit to top tech talent, says Roland Emmans, Head of Tech Sector at HSBC UK.

The UK has always had an outsized reputation in the tech sector. In the most recent Tech Nation Report in 2021,1 VC investment in the country was the third highest in the world at a record $15bn in 2020. That means the tech economy in the UK comes right after the world’s largest, the US and China, despite our country’s much smaller geographical and population footprint.

There are a number of factors that combine to make the UK a source of great innovation. It arguably begins with its world-leading universities, which are not only prominent in technology today, but also instrumental in pushing the technologies of tomorrow.

Roland Emmans | Head of Tech Sector at HSBC UK

The home of innovation

Britain has a long history of innovation, home to some of the biggest breakthroughs in tech, from some of the first code-breaking computers at Bletchley Park to the creation of the World Wide Web in 1989. Digital technologies drive the UK’s economic growth, contributing £151bn (US$200bn) in output and accounting for 1.6mn jobs in 2019.

There are a number of factors that combine to make the UK a source of great innovation. It arguably begins with its world-leading universities, which are not only prominent in technology today, but also instrumental in pushing the technologies of tomorrow. From AI to neural networks to quantum computing, British universities are fostering talent and are frequently the springboards for commercially viable businesses.

Government support

The government is also very supportive of the tech industry. The UK’s National AI Strategy encompasses a 10-year plan to step-change for AI across the nation, recognising the power of AI to increase resilience, productivity, growth and innovation. With this in mind, the UK hopes over the next 10 years to position itself as the best place to live and work with AI.2 The UK also leads in cybersecurity, with the National Cyber Security Centre established in 2016 to help the country become the safest place to live and work online. From electric vehicles to the future of healthcare, the government is also backing policies that embrace new technologies and cutting edge digital transformation across industries.

Perhaps most importantly, the UK has a skilled workforce in place and the means to produce or attract more tech workers. From government support for attracting overseas talent to highly skilled workers trained in top universities, Britain has a strong front in the global war for talent. It also helps that the UK is a great place to live. London is a global city, but you don’t even need to live there. You can live in the Thames Valley, Oxford or Cambridge, have a good quality of life, low crime rates, culture and great schools and still get into the metropolis of London very quickly. If you’re an international business, these are the softer issues that can make all the difference. Global connectivity and a good quality of life make doing business in Britain very attractive.

Digital transformation and helping businesses in other industries to become more digitally native is a key theme in the UK, whether it’s AI, deep data analysis or just moving to the cloud. More recently, technologies linked to sustainability and net-zero targets have been gaining in prominence.

Roland Emmans | Head of Tech Sector at HSBC UK

Britain builds great companies

From startups to scaleups, the UK has built strong tech firms, unicorns and companies that have listed or been acquired at high valuations. While it’s not as easy to raise capital as it is in the US, this is arguably one of the country’s strengths. Businesses that thrive have to be robust, they have been tested before they get to market.

Today, in contrast to five or six years ago, there are successful entrepreneurs that are putting their money back into the ecosystem and acting as role models for the next crop of innovators. And innovation is growing in three key categories.

Digital transformation and helping businesses in other industries to become more digitally native is a key theme in the UK, whether it’s AI, deep data analysis or just moving to the cloud. More recently, technologies linked to sustainability and net-zero targets have been gaining in prominence. Much of this technology is relatively early stage, but it’s developing at pace, from technical solutions for energy problems to data-led ESG reporting.

Automation and the thorny problem of tech talent shortage is another important area. Today, tech skills are needed in every industry across the economy and there’s a huge shortage of talent. Automation could provide part of the answer by allowing people to do high-value work, while software takes care of repetitive tasks.

Why multinationals come to the UK

The challenges facing the tech sector right now are global. There are some supply chain issues around semiconductors as well as batteries and battery components. There is also the shortage of tech talent and inflation could add a new factor to consider in terms of wage increases.

But the UK has the right innovative culture to navigate these challenges. Tech companies in the UK have got great IP, great ideas and great people, so much so that they often end up being acquired by large US or multinational firms. But savvy firms who want to get ahead of that curve come to the UK to be part of that ecosystem, instead of acquiring the business years later. Whether its direct investment, launching an innovation centre or having a subsidiary in the UK, being part of that innovation system means benefitting from it across your entire business.

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