The answer here can be found if you just "follow the money" and realize that while some investments follow international boundaries, other types of investments are highly mobile.

The lack of UK hardware startups is due to the lack of local VC appetite and the unwillingness of US VCs to fund a non-Delaware incorporated company. Therefore the investment from a VC to a startup is generally "bounded" by geography.

The lack of UK VC appetite is due to the fact that there are just not that many LPs that want to give their money to a UK VC given their choice internationally. The LP investment to VC is "unbounded" - meaning it just follows exactly where the returns are highest.

What we really need is for UK startups to break the international border between silicon valley and the UK (or anywhere else for that matter). This means setting up a Delaware C corp, selling to the US, but keeping most of the talent in the UK.