The survey, conducted among 130 business leaders across all major software and IT services sectors and end user industries, serves as a benchmark for understanding the challenges and opportunities facing the UK tech industry.

Government policy and industry sentiment

The Spring 2025 Tech Confidence Index reveals that UK tech businesses are feeling the strain of a tough economic climate.

61% of respondents rated current UK business conditions as “neutral” or “poor.” Equally, optimism about the future has declined, with only 45% of respondents expecting business conditions to improve over the next 12 months. This marks a significant drop from 60% who expressed optimism in Autumn 2024. Falling demand and declining sales emerged as the top concern, cited by 57% of respondents.

Confidence in government policy as a driver of success in the tech sector has also weakened further. Only 24% of business leaders now view the government’s impact on the tech industry as positive, compared to 43% six months ago. Respondents highlighted specific challenges, including rising National Insurance Contributions as impediments to growth.

Strategic investment priorities

Despite the economic pressures, UK tech businesses remain committed to innovation and investment in key growth areas. 84% of respondents reported plans to invest in Artificial Intelligence (AI) and Generative AI (GenAI) over the next 12 months, solidifying its position as the top investment priority. Other major areas of focus include digital transformation (51%), automation (48%), and cybersecurity (40%), highlighting a continued drive toward technological advancement and operational efficiency.

Intensifying skills shortages

Skills shortages are increasingly impacting UK tech businesses, with 54% of respondents reporting that talent gaps are affecting their ability to perform. This figure has risen from 46% in Autumn 2024, reflecting a growing challenge in the sector. The most critical skills in demand include software development (29%) and AI expertise (19%), underlining the importance of fostering technical talent to sustain growth.

The role of emerging technologies

AI and GenAI continue to lead the way as key drivers of growth for the sector, with 84% of respondents identifying them as pivotal. Other significant technologies include data and analytics (58%) and automation (48%), underscoring the importance of digital transformation in maintaining competitiveness.

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 remains an essential benchmark for understanding market sentiment and guiding strategic planning for the UK tech sector.

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