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Tech industry helps drive GDP growth post-Brexit
The technology sector is one of the key drivers behind the UK economy’s 0.5% growth in the months following Brexit
Figures from the Office of National Statistics (ONS) show that the UK economy has grown by 0.5% since Brexit, helped along by the technology industry.
The growth is slightly lower than the 0.7% in the previous quarter, but higher than economists had predicted.
The ONS said that growth was “primarily driven by the motion picture, video and TV programme production, sound recording and music publishing activities, and computer programming industries”.
The quarter has also seen the fastest growth in transport, storage and communication industries since the fourth quarter of 2009, according to the ONS.
Joe Grice, chief economist at the ONS, said there is so far “little evidence of a pronounced effect in the immediate aftermath of the [Brexit] vote”.
Commenting on the growth, chancellor Philip Hammond said the figures shows that the UK economy is “resilient” and “well placed to deal with the challenges and take advantage of the opportunity ahead”.
Earlier in October, Hammond announced a £220m investment to boost technology projects as part of a push to “future-proof” the post-Brexit economy.
The UK technology sector has grown substantially in the past five years, from £120bn in 2010 to £180bn in 2015.
Read more about Brexit and IT
- The UK IT sector reacted with alarm, tempered by a calm pragmatism, to the British referendum verdict to leave the EU.
- Industry watchers expect sterling’s position to remain weak against the US dollar after the Brexit vote, prompting speculation that US IT suppliers may increase prices.
- The collapse in the value of the pound following the EU referendum has not dented BT’s confidence, with strong growth reported across multiple business units.
Julian David, CEO of IT industry trade body techUK, wrote in an opinion piece for Computer Weekly earlier in 2016 that, while Brexit was not what the majority of the tech industry wanted, the sector still has the potential to create growth.
“We have an opportunity to create a phenomenal wave of tech-led growth for the next decade, which will produce a rich and vibrant landscape of new, high-value jobs,” he said.
However, the drop in the pound as a consequence of Brexit is already showing its impact.
According to 451 Research’s latest quarterly Cloud Price Index report, UK-based public cloud users will pay thousands of pounds more in 2016 than in previous years for the same quantity of compute resources due to the weakened pound.
Speaking to Computer Weekly earlier this in October, Owen Rogers, research director at 451 Research’s Digital Economics Unit, said the main issue was that cloud companies tend to bill UK customers in dollars.
“If you are a British user consuming exactly the same large basket of goods, with the same specifications, you are paying around £1,750 more, purely because of currency fluctuations, which is horrendous,” he said.
