UK high-tech firms ‘under threat’

Government funding is needed as the credit crunch threatens a generation of small high-tech companies, a business investment group warns.

The National Endowment for Science, Technology and the Arts says the UK could lose its global standing in areas like healthcare and biotechnology.

There was a 70% fall in new venture capital funding last year, it says.

PM Gordon Brown and Business Secretary Lord Mandelson are to set out industrial investment policy later.

The body, Nesta, says the government must step in and go half-and-half with the private sector to provide £1bn for high-tech investment.

The report identifies healthcare, green technology and digital media as sectors where the UK could lose its leading international status unless the government offers support.

Nesta also urges Chancellor Alistair Darling to use the government’s multi-billion fiscal stimulus package to support lending to companies working on new technologies.

‘Serious consequences’

It said: “The effects of not investing in these sectors are serious.

“If the innovative capacity of our healthcare sector weakens, over £8bn worth of pharmaceutical exports and over £1bn of domestic sales could be lost annually.

“The cost to the NHS and to society in terms of poorer health outcomes would be considerably larger.

“Failing to capture a share of the global market for clean technologies and environmental services similar to that which we enjoy in other important export markets, and falling behind with plans for renewable energy production, could lead to a loss of over £28bn in revenues.

“Failing to step up to the digital challenge in our creative economy could cost the UK economy over £6bn in value added per year by 2013.”

Meanwhile, a minimum wage freeze has been called for by business leaders as part of measures to help private industry drive the economy out of recession.

The British Chambers of Commerce wants more supportive measures in the forthcoming Budget, including cutting small businesses’ corporation tax.


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