The UK capital has beaten its rivals across Europe to retain its crown as Europe’s most technologically advanced city.

The capital’s excellent infrastructure, highly-skilled talent pool, seamless legal and tax regime and widespread adoption of new technology led to it keeping its top spot, according to Z/Yen Group’s sixth edition of the Smart Cities Index.

Oxford and Cambridge also placed ninth and tenth, ahead of any other European city.

Worldwide, London came second in the overall table with the global top spot going to New York.

The UK’s tech industry is now valued at $1 trillion, a landmark milestone that has previously only been reached by the US and China.

The figures, which combine the valuations of the UK’s public and private technology companies, puts the value of the UK tech industry at more than double that of Germany and almost five times larger than France and Sweden.

Professor Michael Mainelli, executive chairman of Z/Yen Group, said:

“Innovation in technology and science arises from calculated serendipity, bringing together talented people to find new ways to look at and interact with the world.”

“Global centres that create spaces and places for people to gather and extend the reach of our technological development will be the commercial success stories of the future,” he added.

In 2018, the UK tech ecosystem was valued at $446 billion. But a growth surge between 2020 and 2021 – accelerated by rapid digital transformation during the pandemic – helped propel the UK tech ecosystem by 42% towards the $1 trillion milestone.

Record levels of venture capital investments have helped increase the valuations of UK tech companies, with the report showing the country is now home to 13 decacorns – companies valued at $10 billion or more.

Among them are fintech company Revolut, data centre firm Global Switch and semiconductor company Arm, which is currently preparing for a likely US IPO following its abandoned merger with Nvidia.

Eight of the UK’s 13 decacorns are fintech companies, a sector that dominates the UK tech landscape and that brought in a record £8.56 billion in funding last year.

The majority of the UK’s unicorns are located in London, but 44 of them are now located outside of the capital.

Gerard Grech, chief executive at Tech Nation, commented:

“This is a watershed moment for UK tech. The industry has gone through difficult global challenges and come out stronger than ever.

“Ten years ago people said there weren’t enough startups in the UK. Five years ago people said there weren’t enough scale-ups. Every day, innovative and experimental tech companies are being launched across the UK that will grow into the next generation of unicorns and decacorns, and we at Tech Nation are committed to supporting and fuelling these high-potential businesses across the whole country.”

Yoram Wijngaarde, founder and CEO at Dealroom, added:

“The explosion in VC investment started by the pandemic amid the overwhelming demand for digital services for healthcare, education and food delivery has helped spur on this growth but the foundations were laid long before 2020.

“As companies and investors grapple with the global challenges of 2022, from the Russia-Ukraine war to the ongoing supply chain crisis and the cost of living rises, it’ll be interesting to see how tech ecosystems like the UK’s adapt and adjust.”

The report also found that there are 14 unicorns valued between $5 billion and $10 billion, suggesting there will be more decacorns arriving on the scene in the coming years.

The latest figures cement the UK’s position as one of the world’s leading tech hubs. It was revealed earlier this year that UK tech companies made up 38% of the combined valuation of European unicorns in 2021 – the highest percentage across the continent.

Government research published last year found that the UK digital sector is on track to add £190 billion in value to the UK economy and create nearly 700,000 jobs over the next three years.

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