Tech leaders have labelled the UK government’s Spring Statement “encouraging”, as the chancellor of the exchequer announced a ramping up of tech investment, increased use of AI and no further tax hikes.
The startup industry also welcomed the government's move to scrutinise tax relief for entrepreneurs and investors.
Today, chancellor Rachel Reeves said the UK economy is now expected to grow slower this year than expected, according to the government's official forecaster.
The Office for Budget Responsibility (OBR) expects the economy will now grow by one per cent in 2025, down from its October prediction of two per cent, the chancellor announced.
Included in the Spring Statement were measures likely to appeal to the UK tech sector including AI playing a pivotal role in public sector reforms and increased investment in defence technology.
Mel Morris, the tech entrepreneur and former chair of King, the company behind the mobile game Candy Crush., said:
“It is encouraging to see the government consistently championing AI and cutting-edge technologies to digitalise and enhance public services, making them more accessible to consumers.”
However, Marc Warner, CEO of UK AI startup Faculty, said:
"With anaemic growth since 2008, the chancellor must realise tinkering around the margins will not arrest the UK's economic slump.
“The path to reviving our economy will be paved by technology - and AI is now widely recognised as the most important 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.”
On defence spending, the chancellor announced a £2.2bn investment for the Ministry of Defence to invest in next-generation technology, including AI and drones.
The Ministry of Defence said it would allocate 10 per cent of its equipment budget to next-generation tech, including AI and autonomous systems from next year.
Dom Hallas, executive director, Startup Coalition, said: “This is very positive and there's a great opportunity for growth in this space for startups.”
However, some cautioned that increased investment in defence spending should not compromise spending on green tech and clean energy.
On taxes, the chancellor said the statement did not contain any further tax increases, but highlighted the need to tackle tax evasion.
Meanwhile, the Treasury has committed to talks on making the UK the best place to start & scale, focusing on the Enterprise Management Incentive (EMI) scheme, a tax-advantage employee share option scheme for UK companies.
In a further boon to the tech industry, before the Spring Statement, the government announced plans to axe 10,000 civil service jobs, with AI tech plugging the gap.
The government also announced a £3.25bn fund to invest in public sector reforms, which will be spent on AI and innovative projects.
Commenting on the measures, Wouter Durville, CEO and co-founder at startup TestGorilla, said:
“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. High turnover simply isn’t an option - but with pay rewards stagnating, retention is going to be tougher than ever.
"This is where developing talent will be key. With ‘fire and rehire’ off the table, businesses must double down on training, upskilling, and internal mobility to keep teams engaged and growing.
“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, the SaaS platform, said:
“While it’s reassuring that tax hikes may be off the table, I urge the government to prioritise measures that encourage business growth and investment in the UK. 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.”
Philip Salter, founder, The Entrepreneurs Network, said:
“For many founders of the UK’s most innovative companies, delays and uncertainty around the UK’s R&D tax credits regime have hit them hard.
“While the Government has made efforts to improve the system, more work is needed, with the announced consultation offering an opportunity to improve the system.
“However, the consultation is too focused on widening the use of advance assurance.
“While this can provide certainty to businesses, it’s not without an administrative burden – both for businesses and the government – and fails to address the more serious problems in the system: delays, errors, and a lack of avenues to reach HMRC.”
IMAGE: PIXABAY
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