Boris Johnson’s phased plan for reopening the economy, unveiled on Sunday evening, has been greeted by criticism for lacking clarity; for many, it prompted more questions than answers.
Nevertheless, the foundation of the proposal is grounded in a recognition that the UK economy cannot continue as it is indefinitely, and that we need to get activity going again. For the tech sector, it has adapted at pace and most businesses have taken to remote working with seamless operational continuity.
I have heard first-hand from tech companies around the world that in a matter of days they had moved from having hundreds of office staff to full cloud-enabled remote working seamlessly. Unsurprisingly, the tech sector has proven more adaptable and faster in this immediate transition than many industry incumbents, which have felt the burden and challenges of legacy infrastructure.
The tech sector at large then will not be one of the first segments of British enterprise to be heading straight back to the office. And while human interaction and social cohesion have an intrinsic value to tech – the ‘coffee shop’ culture is certainly being missed – the widespread adoption of digital tools to enable collaboration has proliferated. This places tech as a front runner for leading on what the future of work will come to look like.
Arguably, of greater importance for tech entrepreneurs in the UK will have been Chancellor Rishi Sunak’s announcement of an extension to the furloughing scheme into October of this year. This approach is a smart move that should hold the gates on the flood of unemployment that could have occurred under a cliff edge retraction of wage support from the government. At present, 7.5 million people are using the scheme at the cost of £14bn a month.
For many startups and scaleups the scheme has been an essential lifeline and rightly receives high-level praise in the tech sector for enabling companies to keep the lights on as uncertainty undermined demand and revenue growth. The question now becomes how to bring businesses off the scheme, which in part is captured by Sunak’s plans to have firms start sharing the cost with the government from August. Hopes are that companies by then will have the means to do so while keeping as many people employed as possible – many businesses will survive but others will not.
The other critical part of the equation must then be growth. As the UK moves through the phases of reopening areas of the economy under social distancing provisions and the furloughing support resides, for the tech sector there will be an urgent requirement to stimulate activity. This period of enormous economic disruption has been felt hardest as a catastrophic demand shock for businesses, and so while the Future Fund, InnovateUK grants, Bounce Back Loans and CBILS will all play their part as a stimulus, we will need tech entrepreneurs to do what they do best and go for growth once more.
The Office for Budget Responsibility reports the UK is in waiting for the largest economic shock in over 300 years, while our Chancellor contends that it’s a “V-shaped” recovery with a sharp fall in GDP, shortly followed by its mirrored increase. In turning the tide on decline, the private sector will need to engender a sense of both optimism and confidence that should be grounded in the fundamentals.
UK tech will need to rely on its world-leading pools of digital talent, its ability to attract inbound investment, its creativity and proven versatility to cater to the future of work, evolved consumer behaviours, reinvention of global supply chains, and new enterprise requirements that have emerged as a consequence of Covid-19.
There are large scale challenges that are still to be met, and the road ahead will be fraught with pitfalls, but recovery for the tech sector will not be built on government stimulus alone – it will be met by an ecosystem of entrepreneurs that have a great role to play in creating the “V Shape” and an ability to deliver for the wider economy.
Russ Shaw is the founder of Tech London Advocates and Global Tech Advocates