Wings over the UK
London has been the historic draw – but major US tech investment now targets England’s North East
By Mike Cowley
In the wake of reports in the New York times that Silicon Valley is losing its shine, the UK is increasingly seen as an option for US tech companies hoping to rekindle the spirit of innovation that created global giants such as Google and Facebook.
Concerned by both spiralling property prices and with an economy subject to the whims of an unpredictable President, US tech companies are looking ever more favorably on the flexibility of the second most deregulated major digital economy in the world – the UK.
There is a growing commercial awareness that the UK offers US companies a unique opportunity in that it leads the world in doing business on-line, seen as the underlying reason why more than 10,000 new tech firms opening for business in the UK last year. And not only is much of Silicon Valley aware of it, it is helping stimulate it, investing close to $2 billion in UK firms last year. (American investors were behind one of third of all UK start-ups over the same period, with the prospect of Brexit seeming to have little or no effect.) Whereas London is the obvious draw – a recent poll within the US business community found nine out of 10 could not name another English City – with more than 60% of US investment finds a home there.
However there is an obvious correlation between the issues of Silicon Valley and those to be found in a move to London – exorbitant property prices and a pool of expensive and far from loyal talent.
Yet in terms of tech clusters, the UK does not start and end with London. They are sprouting up across the country as both the government and local councils see them as a natural driver of the economy.
Tech is expanding 2.6 times faster than the rest of the UK economy with the digital tech sector worth nearly $240 billion to UK economy in 2017, up from $130.6 billion the previous year.
With each UK tech cluster seeming to claim to be the fastest growing, offering the most appealing lifestyle and an infrastructure to guarantee tech growth, there are few honest brokers to steer inward investors in the right direction.
One UK economist who can claim to be such is Professor Douglas McWilliams who was once an adviser to the then UK Chancellor turned newspaper editor George Osborne and is recognized as one of the few impartial pundits in the country.
Having the studied the growth of the digital economy in America, he identified three factors crucial to success: a highly skilled workforce, cheap housing and a sense of cultural buzz.
The Centre for Economics and Business Research (CEBR), founded by McWilliams, has ranked every region in Britain according to these factors with Newcastle upon Tyne, the furthest away from London, placed first.
Whereas McWilliams pinpointed Newcastle, he agrees he was really referring to the North East region as a whole which is home to 2.6 million people, with Newcastle sitting in the centre as part of the Tyne and Wear conurbation
Here is a region that once thrived on coal mines and shipbuilding only to become one of the most deprived areas in the UK when the underpinning industries effectively collapsed. Like many areas who have suffered from severe economic blight, the North East has been forced to reinvent itself as a centre of innovation – only it is universally acknowledged it has succeeded – with digital tech a significant part of the equation.
This has been spearheaded by Guy Currey and his North East Inward Investment team working closely with a wide range of partners which has provided the focus to attract companies from the US into a range of sectors including digital tech.
In this issue, World Insight will take a look at why the North East is seen as the world’s emerging digital tech hotspot – and why US tech companies have been at the forefront of inward investment there.
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