Despite remaining the most upbeat sector in the UK economy, companies have started feeling the pressure from political uncertainty as well as global trade frictions, according to KPMG’s latest UK Tech Monitor Index.
It found strength of business activity was measured at 52.4 during the last quarter of 2018, compared to 54 one quarter earlier.
Moreover, tech companies reported the sharpest decline in backlogs of work for the last seven years, which put them off hiring more staff.
However, these businesses will continue to be a “strong engine of job creation”, the survey said, with half of the respondents expected to boost workforce numbers.
Investment plans in research and development are also expected to drive confidence in the sector in 2019.
Bernard Brown, vice chair at KPMG UK, said, “Our survey reveals that political uncertainty has dented client confidence contributing to a slowdown in growth at the end of last year.
“But, buoyant staff hiring and capital expenditure plans are still in place for 2019. This confidence is reflected in the statistic that almost 50% of UK tech firms intend to add jobs over the next year, whilst many traditional manufacturers are considering moving jobs offshore.
“This demonstrates the strength and resilience of the UK tech sector in the new digital economy.”
ICAEW said in its economic forecast in December that the UK economy would grow by 1.6% in 2019, thanks to a predicted bounce back in business investment and chancellor Philip Hammond’s decision to relax his fiscal stance.