Chancellor announces over £2.5 bn in Tech R&D: will it suffice to bolster UK tech economy following Sillicon Valley Bank collapse?
British Chancellor of the Exchequer, Jeremy Hunt, announced the government’s plan to solidify Britain’s position in the global tech landscape. Among his 4 E’s – Enterprise, Education, Employment and Everywhere – to boost growth, the chancellor has announced the launch of an AI sandbox – committing £900 million to implementing recommendations for an exascale computer. Investment of £2.5 billion in a Research and Innovation Program towards the development of a quantum-enabled economy by 2033 was also announced.
However, this comes following the second and third biggest bank failures in US history (Silicon Valley Bank and Signature Bank), which have caused anxiety among investors worldwide, causing a FTSE 100 wipe off of over £50 billion on Monday. On Tuesday, the FTSE 100 remained down as major US banks experienced around $90 billion in stock market value loss on Wall Street.
The collapse of Silicon Valley Bank (SVB) sent shockwaves across the global tech sector, with the British government grappling over the weekend to limit the repercussions on the UK’s SME arena. Undoubtedly, the effects of the collapse will have a significant fallout on some of the UK’s most promising companies, mitigated to some extent by HSBC’s intervention. However, Claire Trachet, tech industry expert and CEO and founder of leading business advisory, Trachet, explains the need for stronger support for UK tech startups outside the lines of institutional funding.
Whilst Trachet explains that it’s welcome news to see HSBC step in, she also warns that this marks a turning point for the UK tech ecosystem, particularly for companies without the luxury to fall into the safety net of institutional investors. With some VC firms additionally feeling the impacts of cashflow following the demise of SVB, private equity houses now bear a significant responsibility to buffer the fallout.
Tech industry and M&A expert, Claire Trachet, comments on the Spring statement and its implications on startups, tech and M&A:
“Although the UK economy has shown signs of rebounding, it is imperative that the government continues to prioritize the tech sector. While the Science and Technology Framework is a positive step, sustained investment and attention are needed to maintain Britain’s status as a leading country for tech innovation and growth. With technology solving significant problems and investor interest growing, now is the time to be competitive and create incentives that will incite investment into the UK tech sector – something the chancellor’s spring statement has successfully addressed.
“Following the recent collapse of the UK arm of the Silicon Valley Bank, government intervention was reactive, effective, and demonstrates the speed and togetherness which will create market confidence in the UK.
“The government’s commitment to strengthening the country’s position in artificial intelligence through the AI sandbox and the clarity on IP rules for generative AI companies will enable us to bring cutting-edge products to market faster. Additionally, the £900 million funding for an exascale computer and the £2.5 billion Research and Innovation Program for quantum computing will position the UK as a world leader in this field. Introducing funds such as “The Manchester Prize” also offers an incredible opportunity for groundbreaking AI research to be recognized and incentivized in the country. “