The impact of tech in the UK economy has been underestimated. The 2019 Blue Book will introduce a series of improvements to the UK national accounts. Estimates for software spending will be revamped: the revisions are hefty. Official figures had previously understated the true size of software spending by companies in the UK, which may help to explain the strong jobs numbers in technology.
Brexit uncertainty has taken its toll: jobs growth was strong at the start of this year, but vacancies have been falling. Overall FDI is shrinking. Micro Focus slashed its sales guidance this morning after ‘weak sales execution’ and a ‘deteriorating macro environment’.
Nevertheless, a report last week by Tech Nation found that foreign investment in UK tech companies jumped to $6.7bn in the first seven months of 2019, surpassing the figure for the whole of 2018.
Indeed, ‘tech services’ employment growth in the UK (which includes ‘information & communication’ and ‘professional, scientific & technical services’) rebounded to 3.21% y/y in Q1.
The ONS now estimates that own-account software investment totalled £24.9bn in 2016, £11bn higher than previously assumed. Moreover, “Upward revisions average over £2 billion per year between 1997 and 2008, and over £7 billion per year between 2009 and 2016. Average annual growth between 1997 and 2016 increases from 2.7% in Blue Book 2018 to around 6% in Blue Book 2019.”
There is no way of predicting the turn of political events between now and the end of October. However, the ‘once in a generation digital transformation’ that is driving software spending higher will be an important prop for the UK economy.
