Home » What the 2024 Spring Budget means for the UK’s tech industry

What the 2024 Spring Budget means for the UK’s tech industry

The UK’s Chancellor Jeremy Hunt announced the UK government’s 2024 Spring Budget today (6 March), but how has this budget acknowledged the UK’s tech industry? 

Incentives to retain skilled tech workers and investment

Hunt stated that the UK was on its way to becoming its own Silicon Valley for tech development, explaining that the UK’s tech industry was now twice the size of Germany’s and was currently the largest tech ecosystem in Europe. 

To support this growth, Hunt stated that the UK government remained committed to retaining skilled UK tech workers through better pensions and investment ISAs (individual saving accounts). 

Hunt stated that the UK government was examining Edinburgh & Mansion House reforms which would make it easier for pension funds to be invested in the UK tech industry. Hunt said that this was anticipated to encourage money into the tech industry from retail investors, or non-professional investors. 

“British ISA which will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs,” Hunt said, “This will be on top of the existing ISA allowances and ensure that British savers can benefit from the growth of the most promising UK businesses.”

With the rise of AI, technology skills are now needed across industries leaving tech companies facing a shortage of job applicants. 

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Praveen Prabhakaran, chief delivery officer and UK managing director of tech company UST, stated that it needed more incentives to promote upskilling and innovation. 

“Digital skills and development will be crucial to a thriving UK technology sector,” said Prabhakaran, “According to recent statistics, two-thirds of businesses are facing a digital skills gap in their workforce, so our hope is that the government will also continue to focus on investment in this area, supporting education and training initiatives.” 

Inflation and recession 

The UK’s economy officially entered a recession in February 2024, creating a potentially unstable environment for the UK’s tech workers and business leaders. 

Hunt stated that inflation was 4% lower than when the UK’s current Prime Minister came to office and cited that the OBR (Office for Budget Responsibility) expects the economy to grow 0.8% by next year.

“Tackling inflation, while necessary, is painful,” Hunt stated, explaining that it would take higher interest rates to manage inflation. 

Inflation was consistently named as the top concern for tech businesses throughout 2023 according to research conducted by research and analysis company GlobalData. Nearly 46% of businesses answered that high inflation had been their top concern throughout the last 12 months in November 2023. 

Srinivas Rao, chief business officer of IT company LTIMindtree, stated that in this financial environment leveraging technology for productivity and efficiency has never been more paramount for UK businesses.  

He stated that UK businesses are facing great difficulties securing funding within the UK, often needing to turn to foreign markets for this investment. 

“The UK should continue to encourage a pro-innovation society that allows businesses to engage in digitalisation, effective automation, and the integration of generative AI,” Rao said, “The UK is changing for the better and so the focus should be on digitising non-digital elements and enhancing existing digital processes.”   

Rao affirmed that the Spring Budget showed that the UK’s tech industry was finely balanced. 

“From VC investment to demand for new digital services the industry is calling for a greater focus on tech to rebuild the UK economy. The government should go further and lay out how their new digital adoption taskforce will prioritise science and tech ambitions,” he said. 

There is concern that Hunt’s budget remained London-centric and was not doing enough to support tech workers outside of the UK’s capital.

Technologist and chief operating officer at Payen & ILIXIUM financial services Sarah-Jayne van Greune stated that the UK government needed a plan for long-term growth that was equitable across the country.

“The UK industry has many tech and business pioneers spanning the country,” she said, “…Ultimately, equality in investment will, in turn, ensure that the Chancellor can put the UK on the path to becoming the next Silicon Valley.”

Nuclear and clean energy 

Hunt stated that the government anticipated nuclear power to account for a quarter of the UK’s energy by 2050 and confirmed that the UK’s Secretary of Energy Claire Coutinho had pledged £120m towards the Green Industries Growth Accelerator building wind and carbon capture infrastructure. 

A further £270m was invested towards manufacturing for zero emissions vehicles and sustainable aviation fuels industries. 

The Spring Budget also confirmed that a deal between the UK government and Hitachi had been sealed regarding to buy a nuclear power site in Anglesey, North Wales. Hunt also confirmed that the UK government owned nuclear energy company Great British Nuclear would advance into the next phase of Small Modular Reactor selection. 

Senior analyst at GlobalData Christopher Papadopoullos gave insight into the government’s decision to focus on nuclear, explaining that it is in line with the UK government’s broader climate approach. 

“The UK is backing a lot of potentially effective solutions, but the amount of cash the government is putting behind these ideas is not as ambitious as, say, in the US and Europe,” he stated, “There’s a growing sense of pessimism around the current level of the UK’s climate investment and whether it will be enough for the UK to meet its 2030 emissions targets.”