Brexit: Effects on Tech in the United Kingdom:
The choice for Britain to leave the European Union is historic as none of the 28 member states has previously left the politico-economic union. It is difficult to predict what the implications of this decision will be, leading many to speculate on the good and the bad outcomes that could potentially result. As there is no precedent, no one is sure what exactly to expect in the coming months, or years.
The June 23rd in-out referendum was a close call, with 48% voting to remain, and 52% voting to leave. But now that the campaigns are over and the results are in, there is an overwhelming sense of uncertainty.
How long will the exit take? What will it mean for those living outside of Britain, but working inside the borders? How will the economy, businesses and industries be affected? What does opting out of EU membership mean for immigration and travel?
There are so many questions spanning countless topics and issues.
In this post, we will be focused mainly on how Brexit could alter the technology industry in the United Kingdom.
Supporters for ‘Vote Leave’, the name given to the campaign of those seeking to exit the EU, claimed that the exit would save the UK billions of dollars per week, while ending the supremacy of EU law over UK law. The overarching sentiment of the campaign was to ‘take back control of the country’.
Leave campaign leaders claimed that money spent abroad on EU membership would be saved and spent domestically on public services such as healthcare and education. Further claims were made that borders would become more secure, reducing the influx of migrants to the UK from Europe, especially in response to the migrant crisis.
Whether or not these platform promises will hold true — or are even possible for that matter— is highly contestable.
The campaign for the UK to remain apart of the EU adopted the slogan “stronger in”, summarizing the central tenants of the campaigns argument, mainly that the UK is stronger as a member state of the EU.
Their position was that although the union has its problems (which do need addressing), the jobs, trade, education, freedom of movement, and other opportunities available as result of the UK’s participation in the EU is worth working towards retaining the country’s membership.
Economic arguments were also a large part of the ‘stronger in’ campaign, citing the Bank of England’s warnings of a recession, and leading economists who contended that leaving the UK would damage the economy from job loss, price hikes, property value losses and more.
The Digital Single Market:
As result of existing online barriers, many citizens miss out on goods and services, while internet companies and start-ups have their horizons limited and governments are unable to entirely benefit from digital tools.
The EU however, seeks to bring down barriers to unlock online opportunities by way of establishing a ‘digital single market’ (DSM), wherein the EU’s 28 national markets will be moved to a single one, containing single market freedoms.
This move will assist in making the EU’s digital world an easier marketplace to buy and sell, as it will redesign the rules of technology and support infrastructure development.
Ultimately DSM is intended to ensure that Europe’s economy, industry and employment sectors can take full advantage of what digitalisation has to offer. Furthermore, this single market strategy would promote innovation, create opportunities for businesses and consumers, and could contribute €415 billion per year to the EU’s economy while creating thousands of new jobs.
The EU will be unable to deliver the full extent of their promise, as harmonization will be lost if the UK chooses to be outside of the single market – taking into account the size and scope of the British economy. This is largely dependent on whether or not the UK’s online laws will be influenced by European plans in the future.
Although Britain’s exit from the UK will not fully take place for two years, meaning the internet laws and infrastructure will remain the same, it remains uncertain how Brexit will affect the full realisation of DSM.
As banks pull out of the UK, moving operations elsewhere as result of the referendum, opportunities for expansion in many sectors are quickly evaporating. None of the UK’s tech firms with a valuation of $1bn+ openly support Brexit, and many contend that leaving the EU would be bad for both business and consumers in the tech industry.
Network operators in the UK believe that being apart of the EU is good for business, as the EU is currently in the midst of removing roaming tariffs for EU citizens travelling in Europe, with plans to expand network freedoms further.
The EU and the US have also recently negotiated ways to govern data sharing and transfers under the new Privacy Shield agreement. However without being an EU member, these benefits and protections will not apply to the UK unless separate negotiations and treaties are made.
Tech Talent Pool and Passports:
To promote innovation, tech enterprises must seek out the best and brightest talent in the pool, and much of this talent comes from outside of the UK. Numerous workers come from overseas, and as many as 1 in 5 workers in London’s tech industry are from somewhere in the EU alone.
The UK is suffering from a skills shortage that is largely being supplemented by skilled IT workers from within the EU.
The fluidity of the European borders, and the freedom of movement across national boundaries afforded EU citizens the fortuity to seek out opportunities outside of their communities, putting their talent to best use where it was needed.
Whether or not this will remain a reality in the future, nobody knows. Negotiations will be necessary to determine what rights and limitations will come with the new UK passports, and how employment in the UK will change in response.
Investments in Digital:
The UK government has invested a vast amount of time and money into their technology sector to supplement their finance sector. This vote will likely threaten that effort as investors and enterprises may question whether the UK will continue to be a global technology hub.
The uncertainty revolving around Brexit will make investors far more cautious, if interested at all, because the leave vote means that it is unclear whether the UK will remain a viable place to access the European market.
This may cause them to pick-up and leave, heading elsewhere in other EU member states where access to the half a billion European consumers is assured. Enterprises have already made claims that during Brexit talks and campaigning it has been difficult to raise money from investors, and it is likely that this will only worsen.
With so much uncertainty combined with so little precedence, all anyone can do is speculate.
Hopefully the decision doesn’t end up being regretted, because I’m not so sure there is an opportunity for a Brentrance after the Brexit.
By: Amberly Martin
Project Manager at Generation Digital Corp.