ALEX BRUMMER: Lagging aid for UK’s gravity-defying tech firms

The way in which American big-tech companies have led global equity markets out of the stock market wipeout of the early days of the pandemic is remarkable.

Britain may not have a Tesla or an Amazon but it is reassuring that UK start-ups are attracting big inward investment and more established quoted firms are having a good war.

Ocado is among the biggest winners and its use of artificial intelligence and robotics sets it apart from other grocers.

Beneath the radar there are other tech firms which are defying gravity, providing confidence that when this crisis is over it is not all doom and gloom for UK plc.

Latest results from Oxford Instruments, an early spin-out from Oxford University, are a case in point. The year ending in March 2020 was better than expected, with profits 5 per cent) higher than forecast.

The post-lockdown order book for the first two months looks robust, with Asia up 19 per cent), offsetting the collapse in the EU (down 23 per cent) and declines in the US. Semi-conductor growth is outpacing demand for precision scientific optical products.

Also doing well is French-controlled electronics group Aveva. It is not to be confused with insurer Aviva, French nuclear experts Areva, transport outfit Arriva, Israeli cosmetics brand Ahava or Aviva Vodka.

Before-tax profits at Aveva doubled in the last year as the firm rode a digitalisation boom. No-nonsense chief executive Craig Hayman is confident that it can expand through the pandemic.

Just as encouraging is data put together by Tech Nation and other industry groups, showing that in January to May of this year, London attracted £4.2billion of new funding. 

That is more than rival tech cities Paris, Stockholm, Berlin and Tel Aviv combined.

The post-financial crisis period saw an upsurge in UK start-ups and Tech Nation is expecting the sector to emerge strongly from Covid-19. 

It will get some help from Whitehall initiatives such as the just-launched Future Fund of £250million of matching resources.

This will run in parallel with an initiative from the Department for International Trade to bolster digital trade with Asia-Pacific countries – less so, China!

Terrific that the Government is acting. But the sums that are involved are distinctly sub-octane.

French airlift

Picking winners is something UK governments have striven to avoid. When it comes to world-beating bits of the UK economy –aerospace, the creative sector, banks (bailed-out in the financial crisis) and even research universities – there is no case for the Government to sit on its hands.

A dirigiste French government shows no hesitation in coming to the rescue of aerospace. It is piling £13.3billion into the sector.

The largest chunk is £6.25billion for Air France. This is the unfair competition which Michael O’Leary of Ryanair is belly-aching about at every opportunity.

Several carriers, including O’Leary’s, BA and Easyjet, have been given access to the Bank of England’s cheapo credit commercial paper facility. 

More critical is the rest of the French package, which includes a fund of up to £893million, targeted at medium-sized players in the aerospace supply chain.

There is £267million to assist updating factories and a whopping £1.3billion over three years to support R&D in the sector. 

If that kind of new cash were forthcoming in the UK, then Rolls-Royce might not find itself having to shed 9,000 jobs in rapid time.

Some French funding could indirectly find its way into the UK via Airbus suppliers among other things. 

Britain should not look at the French interventions as unfair competition. Instead, it should regard them as a good reason to dig deep to maintain the UK’s technological edge.

Tobacco road

For many investment funds British American Tobacco (BAT) is beyond the pale.

Selling killer tobacco products to emerging market countries breaks all the ethical rules even though there are claims that smokers do better with Covid-19.

The alleged benefits in the pandemic have not been enough to inoculate BAT against lockdowns and the closure of South Africa to its products.

Still, for those willing to defy the ethical and woke tendency there is nothing like a handsome dividend, maintained at 65 per cent of earnings, for cheer in a payout wasteland.