UK tech sector falls out of top 10 as emerging superpowers take the lead
The UK has fallen behind in the global tech race, now ranking 13th for tech competitiveness and trailing countries such as Ireland, Singapore and Australia. A new global index has revealed that not a single G7 nation – which includes the UK as one of the world's most industrialised nations – is in the top 10, signalling a concerning trend for Western economies traditionally viewed as leaders in technology. The Global STEM competitive index, produced by STEM consultancy SThree and the Centre for Economics and Business Research (Cebr), points to several factors that have hindered the UK's tech stature. Despite London's status as a top European tech hub, the country's overall position has been compromised by significant underinvestment in crucial sectors, as reported by City AM. The inability to scale domestic startups and a shortage of tech talent are also impeding the UK's technological advancement. Tech authority and ex-government advisor Dr Sue Black OBE has called on the UK to "double down on fostering a tech positive culture before it is too late." She advocates for a nurturing entrepreneurial ecosystem that supports the UK in realising its full potential through a "tech-positive culture, championing investment, and providing long term policy stability." However, there are still positives. The UK ranks sixth in both high-tech exports and computer science university standings, indicating areas of strength within the sector. Universities such as Oxford, Cambridge and Imperial College London are globally renowned for their exceptional tech research contributions. The global tech scene, once dominated by the UK and its G7 counterparts, now tells a different story. Singapore, Australia and Ireland have surged ahead, outperforming the UK and other Western countries in crucial areas like education and investment in future tech. East Asian economies, notably South Korea, Japan and Singapore, are making significant strides in AI and deep tech, leading the way in AI patent filings. In contrast, the UK's AI sector has been hindered by funding shortfalls and regulatory uncertainty, with top talent and startups increasingly eyeing the US for better opportunities. This shift has already had a profound impact. The Wall Street sell-off of major US tech giants, which saw the 'magnificent seven' tech titans lose over $1tr in value due to Chinese AI-bot Deepseek, sent shockwaves through global markets. The ripple effects were felt by European tech companies like Germany's Infineon Technologies and Japan's SoftBank. The UK's tech sector, often dependent on US investment and partnerships, has also experienced the pinch. The UK government has expressed its ambition to position Britain as a global leader in tech and AI. Chancellor Rachel Reeves has pledged to support tech startups and boost private investment in innovation. However, industry experts caution that policy measures alone may not suffice. SThree's chief executive, Timo Lehne, highlighted the rankings as a "clear warning sign" for the UK and its fellow G7 countries. "Once the global epicentre for innovation, these countries are now facing stiff competition from emerging tech hubs. The challenge is no longer just maintaining their position, but ensuring they lead the charge in fostering innovation and nurturing the businesses that will drive the future of global technology."
Microsoft slashes 200 jobs in the UK as sales near £10bn in 2024
Microsoft has trimmed its UK workforce by over 200 positions despite a turnover leap to nearly £10bn, recent disclosures have unveiled. The American tech behemoth saw its employee numbers dwindle from 5,540 to 5,337 in the year ending 30 June, 2024, according to the latest filings at Companies House, as reported by City AM. This headcount reduction follows a period of growth where Microsoft's staff numbers rose from 4,955 in the preceding year. Furthermore, the financial statements reveal that the company's turnover soared from £8.38bn to £9.62bn within the same timeframe, with pre-tax profits also climbing from £652m to £756.4m. Despite this significant uptick in sales and profit, Microsoft opted not to declare a dividend for the year, contrasting with the previous year's £150m payout. While Microsoft's product-related turnover dipped from £1.67bn to £1.51bn, its revenue from services and other segments surged from £6.70bn to £8.11bn. These revelations follow on the heels of Microsoft's $13bn (£11bn) collaboration with OpenAI getting the green light from the UK's Competition and Markets Authority (CMA) just last month. The antitrust body concluded that Microsoft's investment did not trigger the criteria for an extensive merger probe, despite some trepidation regarding the tech titan's sway over the AI startup. The CMA recognised that Microsoft had secured "material influence" over OpenAI via its initial 2019 stake. Nevertheless, it judged that Microsoft had stopped short of acquiring "de facto control," implying it wasn't effectively in charge or steering the startup's strategic choices. Last month, Microsoft warned of a widening gap between UK leaders who utilise AI and those who don't, suggesting that this could jeopardise the country's economic potential and public service efficiency. According to a report from Microsoft, organisations with clear AI strategies are significantly outperforming those without, underlining the pressing need for wider adoption of AI-driven technologies. The tech behemoth cautioned that only half of UK organisations have crafted AI strategies and acquired the necessary skills for implementation. Conversely, the other half is stuck in a rut, lacking formal AI plans and struggling to turn AI aspirations into reality. In June last year, Microsoft announced it was closer to constructing a 'hyperscale' data centre near Leeds after purchasing a 48-acre site from British property developer Harworth Group.
Northumberland expansion for successful university spin-out Microbritt
A successful Newcastle University tech spin out is expanding into a new base in Northumberland on the back of a £400,000 investment. Microbritt, which was spun out of the university in 2021, has developed a precision service which micro-manufactures products from brittle materials such as glass, silicon, polymers and ceramics. The company has developed a patented process for the production of high value prototypes and complex products which are created from brittle materials, and its technology has can be used in sectors including semiconductors, healthcare, photonics and defence. Last year the firm sealed the six-figure investment led by the North East Innovation Fund, which is supported by the European Regional Development Fund, and managed by Northstar Ventures, alongside business investor Angel Groups. The funding has enabled Microbritt to move into its new base in Cramlimgton where it can scale its micro-milling techniques, expand its production capabilities, and invest in advanced technologies and creating new jobs. Dr Carl Dale, CEO and co-founder of Microbritt, said: “The relocation to our new facility in Cramlington marks a major milestone for Microbritt. Expanding our operational footprint by ten times allows us to significantly enhance our manufacturing capabilities, accommodate cutting-edge equipment, and drive further innovation in precision microfabrication. “Brittle materials, like silicon used in the semiconductor industry, have previously been difficult to machine because of their fragility. Microbritt’s new patented process makes this possible and brings established CNC machining technology into a new manufacturing domain.” The firm said the decision to move to Cramlington’s industrial hub was driven by a desire to get closer to key partners, suppliers and the infrastructure to support its growth ambitions. As well as boosting its production capacity, to meet the rising demand for its products, it will also carry out new research and development, to ramp up product innovation and expand its portfolio. New skilled jobs within engineering, research and operations will also be created.
Sheffield sensor start up Phlux Technology seals £9m investment deal
Yorkshire connectivity specialist Phlux Technology is poised to create jobs and boost production capacity after sealing a £9m fundraise. The infrared sensor startup, founded in 2020 as a spin-out from the University of Sheffield, has secured the significant sum in a Series A funding round led by BGF, and existing investors Octopus Ventures, Northern Gritstone and Foresight. Phlux Technology’s work is focused on the next generation of fibre broadband connectivity, and the funding will drive its expansion into the optical communications and sensing markets, based on its antimonide-based semiconductor technology. The company’s infrared sensors are more sensitive than current alternatives while requiring less power, enabling faster, more efficient connectivity for applications like fibre-optic broadband, as well as advanced sensing for vehicles and industrial applications. The technology has the ability to boost data transmission speeds by up to five times, with data rates as high as 50 gigabits per second. Phlux has already built a global supply chain and serves customers across Asia, Europe, and North America and it now plans to scale its team, increase production capacity, and strengthen commercial partnerships to meet growing international demand. Ben White, CEO of Phlux, said: “This funding comes at a pivotal moment as demand for high-speed optical communication systems is growing enormously. By developing world-class, high-performance infrared sensors, we are enabling industries to push the boundaries of connectivity, sensitivity and efficiency by removing a technology bottleneck that has persisted for over 20 years.” Luke Rajah, partner at BGF, said: “Phlux has developed a game-changing technology in a sector that’s long overdue for disruption. With strong academic roots, early commercial traction, and a compelling roadmap, the team is well-positioned to lead in infrared sensing. Backed by BGF’s deep tech investment experience, we’re excited to support Phlux in scaling globally across the sensing and telecommunications markets.” Owen Metters, investor at Octopus Ventures, said: “When we first invested in Phlux, we were impressed with both the team’s expertise in developing novel semiconductor materials, and their ambition to revolutionise infrared sensing. We’ve been delighted with their progress to date and are excited to see this funding deployed to grow the team and bring two exciting new product ranges to market.”
Fintel grows revenue and earnings on the back of acquisitions
Tech provider to the financial services industry Fintel says it has made a positive start to the year following a rise in revenues and earnings on the back of an acquisition spree. The Huddersfield-based plc, which owns a number of brands including defaqto and simplybiz, saw statutory revenue climb 20.6% to £78.3m in 2024, while adjusted operating profits in the same year reached £18.7m, up from £16.9m. Meanwhile core revenue figures - which exclude panel management and surveying activities - were up 21.9% to £68.9m. It also pointed to 17% growth in core SaaS and subscription revenue to £44.1m. Fintel chair Phil Smith noted further volatility in the UK market, caused by global instabilities; "landmark" changes in the UK regulatory environment; and major events such as the Labour Government's first UK budget. But despite the challenging domestic and international backdrop, he expected the UK financial services sector to continue offering growth opportunities - crucially in the technology and data analytics sub-sectors, as well as anticipation of a resurgence in the mortgage market. Growth at Fintel has been underpinned by a series of eight acquisitions since summer 2023, including a number last year in Owen James, Synaptic Software, ifadash, Mortgage Brain and Threesixty Services. It also acquired fund ratings and research agency Rayner Spencer Mills Research Limited in January this year. Overall, the group spent £31.7m and now expects those businesses to contribute to growth in 2025. Matt Timmins, joint CEO of Fintel, said the business had started 2025 well, bringing in new customers. He said: "2024 has been a seminal year for Fintel, marked by continued strategic advancements and strong financial performance. The company has delivered robust results, with complementary acquisitions contributing to substantial growth in SaaS and subscription-based revenues. "We have expanded the Fintel group by welcoming four new businesses in 2024, with the previously announced acquisition of RSMR successfully completing in January 2025. These strategic acquisitions, combined with ongoing investments in our proprietary technology and data solutions, have enhanced our intellectual property, scale, and market presence, laying the foundation for sustained organic growth."
Tyneside tech firm Notify Technology raises £1.5m investment
A Tyneside safety tech business is set to tap into new AI features on the back of a £1.5m investment boost. Notify Technology was launched in in 2017 by Duncan Davies and Andy Dumbell to help businesses to digitally record information through a platform designed to improve health and safety at work. Its platform allows clients to document everything from accidents and near misses to complete audits, inspections and risk assessments, and to manage safety documents and analyse safety data from one central location. Now the firm, whose clients include McDonalds, Siemens and the NHS, has raised a further £1.5m from Calculus Capital, the North East Venture Fund supported by the European Regional Development Fund and managed by Mercia Ventures, and private investors. Notify Technology will use the funding to boost its platform with the addition of new AI-powered features and to accelerate its sales and marketing operations. The platform has been adopted by high-profile names including Wickes, Travis Perkins and Menzies Distribution and has over 250,000 users worldwide. Notify now employs 27 staff and recently moved into new offices in Newcastle city centre and over the past 18 months it has increased annual recurring revenue by 47%. The latest funding round brings the total it has raised to date to over £7m. Duncan Davies, co-founder and CEO, said: “Notify has become the challenger brand in Safety Tech through our approach to service and innovation, delivered by a fantastic team. I’m delighted we’ve been able to raise additional capital from long term investors to support our latest innovations and to continue our growth trajectory. Thousands of organisations are recognising the value of looking after the health, safety and wellbeing of their workforce, and Notify is now perfectly placed to deliver software that drives employee engagement and productivity.” Richard Moore, co-head of Investments at Calculus said: “We are excited to support Notify as it continues to develop its customer led Health and Safety software. We have seen the health safety and wellbeing sector become increasingly important to organisations and Notify is at the forefront of innovation in this space. We are pleased to be able to support the Company in its mission to make a billion workers safer, healthier and more productive.” Natalia Blagburn of Mercia Ventures added: “With businesses facing tighter regulations and rising insurance claims, Notify’s platform helps them manage risks. Incorporating AI will make it even more powerful - transforming safety management from a reactive to a proactive process, and helping businesses prevent accidents rather than just respond to them.”