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UK’s dynamic tech sector is a growth engine for overall economy

10 November, 2021

Gareth Murfitt

UK Technology Industry Leader, PwC United Kingdom

+44 (0)7595 849892


The UK tech sector is hitting new heights in terms of valuations, deals and general vibrancy. But here’s what’s more important: The tech ecosystem is accelerating digital transformation across the economy as a whole.

And the winner is…

The UK Tech Awards 2021 took place on 3 November. PwC is proud of our long association with these awards and our connections with this dynamic and vibrant sector. That’s why this year we sponsored the tech businesswoman of the year category.

There’s a real sense of energy, optimism and opportunity in the tech sector – more than I could ever remember. It’s driven by record levels of investment, the return of UK IPOs and the number of thriving start-ups.

The energy, optimism and opportunity of the sector were there for all to see – in a very tangible, high energy way that we haven’t seen since early in 2020. Congratulations again to all who took part and are driving the sector – and the broader economy – forwards. We note the progress around diversity and inclusion of those shortlisted but there’s still plenty of work to do, of course, because the future will demand we embrace all talent.

…driven by strength in depth – and other dimensions

How will the sector develop? The pandemic has been a catalyst for deal activity and digital transformation but we only expect this to accelerate further. Companies in UK tech, several of which were part of the recent awards, raised their game and took advantage of the opportunity to drive digital change in organisations when the COVID-19 pandemic hit and have achieved record growth and valuations as a result of this shift. Whilst valuations are high, investor appetite remains strong and we have observed a greater proportion of private businesses receiving PE investment, or seeking an IPO rather than exiting to trade buyers. This should increase the breadth of UK tech companies and benefit the UK economy overall.

We also continue to see record numbers of UK start ups. The UK startup and scale-up ecosystem has grown by an average of 24% pa over the past three years, according to figures from Tech Nation, and we only expect this to continue to rise.

UK tech, as well as being a fundamental driver of economic growth, will play a critical role in helping us achieve our environmental and sustainability goals, in the same way as it supported us all during the pandemic.

Recent deals and IPOs such as Wise have highlighted UK success and strength in sub-sectors such as FinTech, cybersecurity and gaming, but there are also huge opportunities in areas such as sustainability, green technology and HealthTech. We’ve seen evidence for this during the recent COP26 climate change conference and the ongoing fight against the COVID-19 pandemic, both of which have highlighted the vital contributions that the tech sector can make towards long-term societal benefits. ‘Tech for good’ is a phrase we’ll hear more and more.

Industry challenges can be be reframed as opportunities

Not everything is positive, naturally. While tech players often score well compared to other sectors with their environmental, social and corporate governance (ESG) initiatives, there is still much to do. The energy usage intensity of some tech businesses, as well as governance challenges around data privacy means that tech companies, like all others, need to be highly aware of their wider role and obligations in society. Going forwards, trust and transparency will become a more critical measure and, something that working together, we can all make improvements in.

And any industry so skewed to men is inevitably missing out when demand for talent is so fierce. There’s clear opportunity in diversity here, and we are seeing hopeful signs of change. While there is still a way to go, this year’s tech CEO of the year and tech innovation of the year were all won by female candidates.

What’s at stake?

Across our client base, we can see that UK tech’s momentum drives broader digital transformation across the UK economy. Success in this one sector is a clear multiplier – and an increasingly influential one at that.

But note: The stakes are high. With rapidly rising valuations, due diligence and decision making around investments has never been more important. The sector’s expansion and increasing influence demand responsibility and a commitment to building and maintaining trust. With growth managed in the right way, opportunities abound.

Gareth Murfitt

UK Technology Industry Leader, PwC United Kingdom

+44 (0)7595 849892


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