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The UK’s tech sector, which has seen rapid expansion in recent years, is now facing a significant slowdown. New data reveals that the number of newly incorporated tech companies in the UK fell by 11% in the second quarter of 2024, marking the first substantial decline since early 2022.
According to RSM UK, 12,318 new tech companies were registered in the second quarter, a slight increase from the same period in 2023 but a noticeable drop from the 13,802 companies registered in the first quarter of 2024. This decline was observed across all regions, with London experiencing a particularly sharp drop of 16%, registering 6,170 new companies compared to 7,253 in the previous quarter.
Ben Bilsland, partner and head of technology at RSM UK, noted that these figures suggest a turning tide in tech growth, warning that the slowdown could have serious implications for both the industry and government. He emphasized the importance of government support in maintaining the sector’s global competitiveness, particularly as the tech sector contributes around £150bn annually to the UK economy.
The slowdown in tech growth comes amidst reports that the government has shelved £1.3bn in promised funding for tech and AI projects. The decision has been criticized as short-sighted, with concerns that it could drive more entrepreneurs to seek opportunities in the US.
The Department for Science, Innovation and Technology defended the decision, citing the need for difficult spending cuts across all departments due to unfunded commitments. Despite this, the shelving of funds has sparked concerns about the long-term impact on the UK’s position as a global tech leader.
