UK’s software economy losing EU leadership
12 December 2008 Pete Swabey
A new report finds Germany and Israel nipping at the UK's heels
The United Kingdom’s software production economy is in danger of losing its leadership among EU countries, a new report has found.
The UK Software Economy Barometer, backed by Microsoft and conducted in partnership with trade bodies BCS and Intellect, found that, while the UK still houses more large software companies than any other EU member, and has the most venture capital (VC) invested in its software companies, that leadership is under threat.
The UK’s share of the EU’s software-linked VC money slipped from 37% in the final quarter of 2006 to 27% in the most recent financial quarter. Germany and Israel, meanwhile, have grown their respective shares to around 19% each.
The performance of software companies on UK financial markets was also cause for concern. “The immediate outlook is not encouraging,” the report says. “Many software companies have already issued profit warnings and struggle to confirm their forecasts. 2008 will also see the lowest level of software company initial public offerings (IPOs) on the London Stock Exchange for more than a decade.”
The report criticised recent developments in the UK’s tax policy as an impediment to international investment and business development.
“The UK tax system emerges favourably in international comparisons but the trend is in the wrong direction,” it says. “For every negative news story regarding company and personal taxation, the perception of the UK as a favourable place to do business declines.”
That finding sits uneasily with comments made this week by Gordon Brown, who told the Global Europe conference that great investment in technology was needed to help the EU through the recession.
“We have looked at how, just as many years ago investment in road and rail and infrastructure was a powerful stimulus to the economies then, so too in this new age we can invest in the digital infrastructure for the future,” the prime minister said.
Further reading
Crunch time for the IT industry
How the economic recession will reshape the IT business – and force some game-changing investment choices
