Confidence in technology sector hits an all-time low as costs spiral
A TECH industry body has warned that business confidence in the sector is at its lowest ever level as bosses warn of a twin hit from energy costs and spiralling wages.
The findings from Techuk come as KPMG says Britain’s consumer tech sector has reported a slump in mergers and acquisitions (M&A) activity thanks to venture capitalists switching their focus to business software makers.
These companies are seen as an attractive prospect for Us-based buyers while the dollar is at historic highs of $1.13 to the pound.
Jonathan Boyers, a KPMG corporate finance partner, said: “The M&A market is cooling. There’s no IPOS happening in the UK, or really across Europe.”
Meanwhile, Techuk’s Neil Ross, its associate director of policy, said of the trade body’s most recent survey of tech business leaders: “Economic headwinds, rising energy and staff costs as well as longer-term concerns over access to talent are starting to bite.”
Just under a third of tech companies surveyed told Techuk they expected the outlook would deteriorate over the next 12 months. The survey was carried out in September and late October, predating the sacking of Kwasi Kwarteng as chancellor.
The survey came as employers’ confidence in the economy plunged below even the lows of the pandemic lockdowns as the cost of living crisis batters businesses and their customers. Bosses are increasingly worried about making hiring and investment decisions, according to the Recruitment and Employment Confederation (REC), while workers fearing a recession are reluctant to take a risk on moving jobs.
It means the skills shortage will keep plaguing companies even if they cut back the vigorous hiring that has been the hallmark of recent years, according to Neil Carberry, chief executive of the REC. “We are finding candidates are becoming less easy to move because they are concerned about the economy.
“The effect is to constrict things more tightly as some candidates lose confidence,” he said. “In a recession, people have in the back of their minds that it is better the devil you know, when it comes to their employer.”
More than three quarters of employers said the economic environment is getting worse. Just 11pc said it is improving. When it comes to hiring, 44pc said their confidence is falling, with 16pc reporting an improvement. The economy shrank in August, a drop that economists expect to herald the start of a recession potentially running to the middle of next year.
At the same time, the Federation of Small Businesses reported the steepest drop in confidence since the pandemic as rising costs and falling revenues hammer companies. Almost half of small companies said revenues fell in the past three months, while almost nine in every 10 said costs are rising.