UK tech leader confidence drops amid economic uncertainty

The confidence level among UK technology sector leaders has declined, with a majority now expressing a neutral or negative view of market conditions, as reported in TechMarketView's latest Tech Confidence Index.

The bi-annual survey, which collected responses from 130 business leaders in the software and IT services sectors, indicates heightened caution as firms contend with economic and geopolitical pressures.

The overall score of the Tech Confidence Index dropped from 6.5 in Autumn 2024 to 6.1 in Spring 2025, showing a clear shift towards a more reserved outlook for the industry.

According to the findings, 61% of UK tech sector respondents described current business conditions as either "neutral" or "poor." Additionally, optimism for improvements in the year ahead has fallen, with only 45% expecting better conditions over the next 12 months, a marked decrease from the 60% recorded six months prior.

Falling demand and declining sales were identified as the leading concern for respondents, cited by 57%.

The report also highlights a significant waning of confidence in government policy as a contributor to the tech sector's success. Only 24% of business leaders now view the government's impact on the sector as positive, down from 43% in the previous survey. Rising National Insurance Contributions were specifically mentioned as a barrier to growth.

Despite these challenges, the majority of respondents are planning continued investments in technological innovation. Artificial Intelligence (AI) and Generative AI (GenAI) are named as the top investment priorities, with 84% of leaders indicating plans to invest in these areas during the next year. Other key focuses include digital transformation (51%), automation (48%), and cybersecurity (40%).

The industry also faces mounting concern over skills shortages. More than half of respondents (54%) stated that talent gaps are hindering their organisation's progress, up from 46% previously. The survey identifies software development (29%) and expertise in AI (19%) as the most sought-after skills, underscoring the ongoing pressure to cultivate specialised talent in the sector.

The expanded adoption of emerging technologies remains a critical driver of growth, with 84% of those surveyed pointing to AI and GenAI as particularly significant. Data and analytics (58%) and automation (48%) are also viewed as vital technologies helping organisations compete and grow in a challenging market landscape.

Georgina O'Toole, Chief Analyst at TechMarketView, commented: "Despite the pressures revealed in the Spring 2025 Tech Confidence Index, the resilience of UK tech leaders is evident in their ongoing focus on innovation and growth. However, addressing skills shortages and fostering a more supportive policy environment will be critical for the industry's future success."

The Tech Confidence Index provides a reference point for assessing business sentiment and is intended to inform strategic planning within the UK technology sector.