As the news breaks on the results of the first quarter of UK growth, with economists fearing that Britain’s economy is losing momentum as growth falls to just 0.1% – the weakest since 2012, the blame game begins. Some blame the snow, some blame the government. Some blame a lack of funding support for emerging SMEs while others simply wallow in their economical slump and stagnation.
The Guardian reports that the consumer has played a leading role in the significant slowdown of the services sector in the UK, with the considerable drop of services output and contribution to GDP growth since 2015 / 2016.
But before you feel overwhelmed, there are two significant tables being flipped, despite all the negative result-reviewing and back-and-forth analysis.
This significant change in our economy over the past few years has meant that businesses are faced with the constant reminder to re-invent, or die. And that’s exactly what they’re doing – and we’re seeing an exciting turn in our economy, and business climate.
1. There’s more M&A activity on the horizon
According to analysts, City A.M has reported that the combination of all-time record high equity markets, low interest rates and a weak pound have created the perfect brewing cauldron mergers and acquisitions (M&A) that analysts anticipate continuing while current market conditions persist.
Two FTSE 100 companies (GKN and Ladbrokes) have already been acquired this year, a third looks set to go and with two more facing bids (Sky, Smurfit Kappa and Shire), 2018 is already one of the busiest years for FTSE M&A in recent times. In the same discussion, the names of William Hill, SSE, Virgin Money, Aldermore and even ITV, are coming as potential takeover opportunities, according to city analysts.
In fact, a business confidence survey by accountancy firm EY showed that 65% of UK companies planned M&A deals over the next 12 months, the highest level since 2010. The same survey also found that replacing the US and India targets for M&A by UK-Based companies, European jurisdictions were now becoming hot property in the world of M&A.
“Rising confidence is seeing deal pipelines and M&A appetite shifting up a gear. We expect this trend to continue for the foreseeable future as executives regard M&A as a growth engine,” says EY’s transaction advisory services managing partner Steve Ivermee. “Improving global growth and the need for UK companies to plan for life after Brexit, mean that UK executives still have a positive perspective on global markets – especially European destinations.”
2. Tech Industry booms
According to Tech Nation’s 2018 report, Tech is expanding 2.6 times faster than the rest of the UK economy. The digital tech sector is worth nearly £184 billion to the UK economy, up from £170 billion in 2016, with London ranking only second to Silicon Valley as the most connected place for Tech in the world.
Hardly restricted to just London, there is significant development in cities and towns throughout the UK who are focussed on becoming the leading Tech development centres of their regions – garnering massive support from both local business communities and funders, as they establish themselves as regional tech leaders. Colloquially being dubbed, “silicon suburbs”, 16 towns in the UK have been identified as showing a higher proportion of digital tech employment than the UK average.
- Slough and Heathrow
- Stevenage and Welwyn Garden City
- Guildford and Aldershot
- High Wycombe and Aylesbury
These 16 demonstrate an above-average level of tech employment and are in the running to become the key areas for next-generation tech start-ups.
Although not without its challenges, the Tech industry will need to focus on diversifying within their businesses – particularly when it comes to average ages of the digital sector workforce, and the mix of ethnicity and gender makeup. Over average, 72% of UK digital tech workers are over the age of 35 – signalling the need to encourage younger workers to get into the tech sector sooner.
The growing trend for informal tech meet-up events throughout the UK is a clear sign of a more networked, healthier, collaborative business ecosystem, where emerging technologies are being discussed, and even shared, with the report confirming that 1.6 million people across the country already belonging to over 3,600 informal tech meet-up groups.
With the UK’s tech sector growing almost 3 times faster than the rest of the economy (Gerard Grech, CEO of Tech Nation), it’s no wonder that investors and foreign businesses are looking towards the UK as a renewed opportunity for global growth.
If you are ready to take advantage of the growth boom, but need additional funding support and operational infrastructure know-how, we can help.