Much of the coverage of the Chancellor Rachel Reeves’s spring statement has focused on the cuts to the welfare budget made to meet her own fiscal rules. Her gamble is that by increasing public sector efficiency, investing in tech, and focusing on growth, the long-term benefits will outweigh the pain welfare cuts will inflict.
The UK tech sector will be a key factor in any growth. Worth £1 trillion, the UK hosts the third largest tech sector after the US and China. Unsurprisingly, tech leaders were quick to comment on the Chancellor’s statement.
AI, innovation and UK growth
There was some welcome to her comments and sentiments. Stefano Vaccino founder and CEO at Yapily noted that, “the government is saying all the right things about supporting the UK’s innovation economy and making the UK the best place in the world to grow a business.” But he added that she needed to be mindful of the importance of technology. “Neither recovery nor growth can succeed without bold commitments to innovation. Britain’s fintechs are at the heart of this,” he said. “We’re creating jobs, attracting capital, growing fast, and radically innovating financial services with products that help businesses and households get more from their money.”
Some leaders noted the focus on public sector efficiency, and pointed to the parallel need for the private sector to drive innovation. Muj Choudhury, co-founder and CEO of RocketPhone.ai, commented, “Private sector innovation is crucial to driving long-term economic stability, but businesses are clearly struggling to grow as ambitiously as they could.” He added that, for the UK to emerge as a leader in new tech, “the UK needs to start by tackling data access, skills shortages and infrastructure gaps.”
Definely co-founder Feargus MacDaeid echoed the need for the government to provide a clear foundation. “The future growth of the UK’s economy hinges on its capacity to innovate and leverage cutting-edge technologies. However, this requires stability in policy frameworks and a clear strategic vision, particularly around frontier technologies such as AI,” he said. “Government support is essential to catalyse private investment, encourage bold innovation, and attract global talent, which is critical to ensuring the UK remains competitive in this rapidly evolving landscape.”
Others suggested that AI was an essential factor in the UK’s economic recovery. Dr Marc Warner, CEO of Faculty AI, said, “AI is now widely recognised as the most important [technology] of our time. It is one of the few levers the government can pull to get cheaper and faster public services – so bold policy must now follow the encouraging soundbites if the UK is truly to have AI ‘mainlined into its veins’.”
More defence in an uncertain world
In a statement marked by cuts in public spending, defence was one of the few winners, reflecting the increased uncertainty around world security.
“What Britain needed from the Spring Statement were concrete steps towards boosting its defence capabilities,” said Andriy Dovbenko, founder of UK-Ukraine TechExchange. Although we welcomed the increase in spending to 2.5% by 2027, he warned, “the figure is still inadequate compared with the resources of other global powers like Russia – but the focus must now be on achieving more with less in the immediate future.”
The announcement of a ring-fencing 10% of the equipment budget on new technologies was welcomed however. Tobias Stone, founder of Resilience Media and Resilience Conference, commented, “The UK’s startup and venture capital sector has the skills and the commitment to take a lead globally in developing tech that strengthens our resilience and supports our defence.”
The workforce squeeze
However, there were also warnings about workforce. “It’s clear there will be heaps more pressure on UK businesses from April. With rises in Employer National Insurance and the National Living Wage, the cost of hiring and keeping staff is soaring,” said TestGorilla’s CEO and co-founder Wouter Durville. “With pay rewards stagnating, retention is going to be tougher than ever,” he added. “Smart hiring and strong retention strategies aren’t just a ‘nice to have’ or box-ticking exercise; they’re the difference between strategic growth and survival in the current climate.”
Ed Bradley, CEO at Virtualstock, pointed out that many government policies, like the rise in National Insurance, are putting employment at risk, and not just in the public sector. He called on the government to consider more pro-business policies. “I urge the government to prioritise measures that encourage business growth and investment in the UK,” he said. “Higher Capital Gains Tax and reduced R&D tax credits are making the UK less attractive for investment, particularly in tech. We need policies that support businesses rather than deter them. Otherwise, we risk losing businesses and talent to more favourable markets abroad.”
If the Chancellor is looking for an effusive response from the tech sector to balance the criticism she’s facing over welfare cuts, more may be needed, with many hoping for warm words to be backed up by concrete action. “The Chancellor must realise tinkering around the margins will not arrest the UK’s economic slump,” said Faculty’s Warner. “The path to reviving our economy will be paved by technology.”
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