Industrial Strategy: Support for tech sector essential for wider economy to thrive

As the government prepares to publish its highly anticipated Industrial Strategy, RSM UK says the technology sector urgently needs investment in people and data centres, and initiatives to support growth and entrepreneurship, to enable the wider UK economy to thrive.

According to TechUK, the UK tech sector employs over 1.7 million people, contributing more than £150bn to the UK economy every year. With an ecosystem valued at over $1tn, Britain’s tech sector is the largest in Europe, overtaking France and Germany combined.

However, there are indicators that suggest growth in the sector is slowing. RSM UK’s latest Q1 2025 analysis found the number of new UK technology companies being incorporated fell 12% to 12,184 in Q1 2025 compared to Q1 2024 figures.

Ben Bilsland, head of technology industry at RSM UK, said: “UK tech companies will be looking for direct initiatives and funding to stimulate the sector, as the number of new UK technology companies being incorporated continues to fall year-on-year. The government’s recent announcements of over £2bn in funding to drive the AI Action Plan, and training 7.5 million workers in AI by 2030, are a step in the right direction, but we want to see more of this.

“Currently, labour shortages, poor connectivity and economic uncertainty are stifling growth in the sector. Talent is particularly key, as a diverse workforce with a range of skills is a proven component of a thriving, innovative tech ecosystem. Immigration policy forms part of this puzzle, so must not act as a roadblock in accessing the necessary skills to encourage further development of groundbreaking tech companies in the UK.

“As it stands, the government’s Industrial Strategy is extremely broad and touches many areas of the economy. UK tech underpins successful innovation in broader industries, for example, it feeds into the design of technology used in our motor vehicles to improve safety, comfort and efficiency, as well as software products used daily across all businesses. Technology often plays a crucial part at various points of the supply chain, so while tech businesses benefit from investment in other industries, similarly, those industries will also benefit from direct investment in UK tech.

“It will be interesting to see if the Industrial Strategy extends to further details on data centre planning and strategy. The government has previously heralded a £3.75bn investment in “Europe’s largest data centre”, which will underpin a digital infrastructure that we will continue to rely on. Increasing use of AI is expected to require increasing amounts of computing power in the background if we are to see the benefits to productivity across the broader economy.”