LONDON - The United Kingdom’s (UK) tech sector expanded at a stronger rate than the entire private sector last quarter and is set to reach a four-and-a-half year high this year.

Tech saw another rise in business activity in the fourth quarter, according to IHS Markit and KPMG research, although the pace of expansion slowed amid a wider economic slowdown.

KPMG’s UK Tech Monitor’s latest reading dipped from the third quarter but it is a positive sign of recovery.

In the three months to December, tech output came in at 51.6, higher than the whole private sector which stood at 50.5.

“The final quarter of 2020, saw the UK tech sector demonstrate such resilience in the face of ongoing pandemic disruptions and some client spending delays ahead of the Brexit transition deadline,” Bernard Brown, vice chair at KPMG UK said.

Growth was supported by a recommencement of projects as well as healthy appetite for digital services and an uptick in spending in areas like e-commerce. It contrasts sharply with falls in employment and sales seen in other parts of the economy.

At 51.6, the index measuring employment rose from 48.2 in the third uarter and pointed to the first increase in workforce numbers since the start of the pandemic.

There are signs that business confidence across the tech sector is picking up. KPMG predicts growth to reach a four-and-a-half year high although this will depend on a brighter economic outlook and renewed corporate spending.

Some firms are planning new product releases and expansion into new markets even as lockdown restrictions continue.

““While there has been little to celebrate over the last year, it will be a relief for businesses and employees in the tech industry to have ended 2020 with an optimistic tone,” Ian West, head of TMT at KPMG UK.

“Expectations of global and national roll-outs of vaccines and consequent relaxing of virus-related restrictions contributed largely to the positive outlook for 2021. It is particularly heartening to be able to speak of job creation at a period of such lingering ongoing uncertainty, for an industry which is so vital to the future innovation of the UK economy.”