techUK reports
10 Mar 2025

techUK and Public First Poll: The State of UK Tech in 2025

Confidence, optimism, and growth defining UK tech’s trajectory

The UK tech sector remains optimistic for the future and ready to grow, the latest edition of techUK’s annual survey has found.  

The poll – a major survey of over 250 tech business leaders – was undertaken by Public First between 27 January – 5 February 2025, and reveals an underlying optimism among the sector despite global shocks. 

The UK remains an attractive place to start, build, and grow a tech business, with respondents citing the ease of the UK operating environment and ranking it above other markets such as Europe and North America – welcome news for the Government as it seeks to galvanise investment through its flagship ‘Invest 2035’ Industrial Strategy, which recognises tech and digital as one of the UK’s strongest high-growth sectors.  

Government itself sees a strong vote of confidence from the sector too, with twice as many tech firms believing the Government has performed well than poorly. Businesses also report their sights are set on growth – expanding their customer base, offering new services, and entering new markets. 

Some work still remains to be done, however. Our survey found significant variations between the responses of larger and smaller businesses, with SMEs repeatedly reporting greater concerns and lower levels of confidence in their economic outlook. High energy costs and high levels of business taxation were also cited as major challenges for the sector to navigate in the year ahead. Addressing these concerns will be critical in ensuring sustained growth in the long-term.  

 

UK Business Environment:  

  • Businesses reported that generally operating in the UK (87%), operating in the tech sector (87%), and accessing digital infrastructure (85%) are the easiest parts of their business they are able to carry out. 
    • Trading with countries in the EU (69%) and accessing government support (67%) performed lowest, but were still broadly positive. 
    • Respondents found accessing finance and investment (74%) marginally easier than accessing government support (67%).  
    • These figures are still higher than in 2024, however, with more tech businesses reporting it was easy for them to carry out core business functions, such as accessing government support (+20%), hiring general workforce (+19%) and hiring talent with specific skill sets (+18%) leading the way with significantly increased sentiment on last year. 
  • Ultimately, over half (54%) of businesses surveyed reported that it was easier or much easier to do business in the UK than in other markets in Europe and North America, up from just 34% expressing the same last year and compared to just 17% that felt it was either more difficult or much more difficult to do business here. 
    • Strengths of the UK identified by respondents include: the ability to work with other tech companies (50%), access to digital infrastructure (48%) and access to a reliable customer base (45%). 
    • Weaknesses identified include: energy costs (52%) and the current level of tax on businesses (42%), increasing 11% and 12% respectively compared to last year.  

The Sector: 

  • Tech businesses are broadly more optimistic about the medium-term future of the tech sector (77%) than they were about the wider UK economy (70%). 
    • We find a more mixed picture when asking about the economy as a whole - while 55% of tech sector businesses think the UK economy will perform better than its peers, almost a quarter (22%) think it will perform worse - rising to a third (33%) of SMBs. 
  • UK tech companies also have a strong growth mindset and want to integrate new tech and services - their top priorities for the next five years are to grow their businesses (45%), onboard new technologies (40%), and expand their current capabilities, services, or products (39%). 
  • Outside of London, Manchester (62%) remained the top city that tech sector businesses identified as the most supportive of the sector’s growth, followed by Birmingham (40%), Liverpool (37%), Cambridge (34%) and Oxford (31%).  
    • Edinburgh was sixth with 27% and showed the greatest rise since last year’s survey with a jump of 10%.  
  • The main motivating factors for tech businesses to invest further in the UK or expand their business to another location, infrastructure (50%), the availability of local talent (30%) and the number of local customers (26%) were the top drivers. 
  • 86% of tech sector businesses surveyed reported that their partnerships are important to their success.   
    • This was substantially higher among larger tech sector businesses (98%) than SMEs (76%).  
    • The most important partnerships that tech sector businesses identified were their partnerships with other businesses in the sector (62%), and their partnerships with the central UK government (43%).  
    • The importance of partnerships with the government was significantly higher among large businesses (52%) than SMEs (32%), and a similar difference was found when asking about the role of partnerships with industry regulators. 

Global Context: 

  • 80% of tech sector businesses said they already have plans to expand into another market or were likely to make plans to do so in the next five years.  
    • This was roughly the same as in 2024 (77%).  
    • When asked which market they would be most likely to expand to, the United States came top with nearly half (47%) of tech sector businesses selecting it. This significantly higher in 2025 than in 2024 (27%). 
  • Tech sector businesses are positive, too, about the relative strength of the UK tech sector - 66% of tech sector businesses said they thought the UK tech sector would perform better than the tech sectors in other countries over the same period, with just 16% saying they thought it would perform worse. 

The Government:  

  • The tech sector has a broadly positive view of the UK Government – twice as many tech businesses think the new Labour Government has performed well (52%) than poorly (23%).  
    • Notably however, for SMEs this satisfaction falls to 38% who believe the new Government are performing well against 33% who think they are performing poorly, whereas sentiment is more positive among larger businesses, of whom 67% think the new Government is performing well vs just 11% who think they are performing poorly.  
  • As above, when asked about the role of partnerships, 43% of tech businesses pointed to central government as one of the most important.  

Adopting New Technologies:  

  • Over three-quarters (77%) of tech sector business leaders reported that their customers have become more interested in adopting AI tools in the last year - rising to 83% of large businesses.
  • Similarly, over three quarters (77%) of tech sector business leaders reported that their customers’ interest in adopting new technologies has increased in the last year - rising to 9-in-10 (87%) of large businesses.  
  • When businesses were asked what factors are motivating their clients to adopt AI tools, we found that this was driven largely by a desire to see increased productivity (56%), to support greater innovation (48%), to improve the overall customer experience (42%), and to improve the efficiency of workers within the business (41%).  
    • Similarly, when we ask tech sector businesses about the major factors encouraging the adoption of new technologies, we find that factors such as improved efficiency, opportunities for innovation, and improved efficiency for workers were the major factors driving adoption. 
  • In contrast, when asked about the major barriers that their clients faced that are preventing or slowing down their adoption of AI tools, the largest barrier cited is security and privacy concerns surrounding AI tools (34%), ahead of the complexity of AI tools (28%), high implementation costs (27%), and lack of management expertise (27%). 
  • Large businesses (37%) are notably more likely than their SMB counterparts (30%) to identify concerns around privacy and security as major barriers that their customers face when thinking about adopting AI tools. 
  • Similarly, when we asked tech sector business leaders which issues they think are the most important to be addressed in order to ease the process of encouraging their customers or clients to adopt AI technology, we found that addressing the security and privacy concerns surrounding AI tools (35%) is the top response, followed by improving the level of training and support surrounding AI tools (22%). 
  • We found a different set of concerns presented major barriers to tech sector clients who were considering the adoption of new technologies in general. As opposed to concerns over privacy and security, issues such as high implementation costs (41%), the complexity of new technologies (37%), and energy costs associated with new technology (34%) were the major barriers that tech sector customers face. 

Notes: techUK is today (Monday 10 March) launching the findings of a major new poll of UK tech business leaders, featuring 250 respondents. Fieldwork was undertaken by Public First between 27th January and 5th February 2025, and the full results can be found here.

Edward Emerson

Edward Emerson

Head of Digital Economy, techUK

Alice Campbell

Alice Campbell

Head of Public Affairs, techUK

Margherita Certo

Margherita Certo

Head of Press and Media, techUK

Oliver Alderson

Oliver Alderson

Junior Policy Manager, techUK

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Alice Campbell

Alice Campbell

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Edward Emerson

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Audre Verseckaite

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Daniella Bennett Remington

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