Business

2017: UK tech businesses are in a downwards spiral of depression

By Oliver Smith 14 February 2017
Summary

Things can only get better?

We said 2016 would be a perfect storm of bad news for startups, which turned out to be spot on.

Now 2017 is shaping up to be a year of depression, as small tech businesses move through the stages of grief following Brexit.

Silicon Valley Bank (SVB) has taken the temperature of UK tech businesses for five years running now, and for 2017 have found that business optimism for the future has never been lower.

Depression is setting in

Just 48% of tech companies believe 2017 will be better than last year, that’s down from nearly 80% in 2014.

Clearly, Brexit and the uncertainty about Britain’s future is accelerating the sharp downturn in optimism, but SVB’s figures show the depression can be traced back over the last few years even before Brexit.

“Though startups are feeling less optimistic about 2017 than they were about 2016, even more are looking to grow their workforce this year,” said Phil Cox, president of Silicon Valley Bank’s UK branch.

He refers to SVB figures that show 89% of UK tech businesses are planning on growing their workforces in 2017, higher than the 79% of US tech groups planning to do the same.

“Not without challenges, but the British technology industry is not slowing down.”

Indeed, even the economists seem to agree.

The Bank of England and the European Commission have both boosted their expectations for Britain’s economic growth this year, admitting that the bite of Brexit won’t be as bad as originally predicted.

Hopefully these upbeat predictions can help Britain’s tech companies to cheer up a little.