… or Life after Brexit
Britain’s thriving technological businesses is under close scrutiny since that day in June when Britain voted to leave the EU. Most in the digital sector favoured staying in the EU and now find themselves in unchartered territories.
I remember speaking to a US games development company who were thinking of making London their headquarters. At the time, the shock of Brexit combined with the fluctuations in exchange rates deterred them from making the decision to move to London.
However, in January alone, I have had at least 5 enquiries from either technology companies that have just started out in the UK or those that are looking to move their base to London. In fact, I would say that our fastest growing client base in the last 6 months is in the technology, digital and e-commerce sectors. What is evident is that Brexit has not deterred tech businesses from establishing their base in Britain. Whilst Brexit has come with its challenges to the sector, the technology sector has also embraced the opportunities that are available.
The entrepreneurs in Britain’s tech sector are used to adapting to change and love challenges. It certainly looks like the tech entrepreneurs are not going to let Brexit deter the success of sector in Britain.
What opportunities and challenges exist for the sector in life after Brexit?
- Britain is at the forefront of many technological developments – driverless cars, 3D printing are inventions in which UK based companies/ scientists have played important roles. Britain continuously punches above its weight when it comes to technology. We have three out of the Top 10 universities in the world. We will therefore continue to have the skills and talents to continue developing and growing within the sector.
- The appetite for deals within the sector still exists – Japan’s Softbank agreed to buy the UK’s biggest tech company ARM Holdings for £24.3 billion. Darktrace, a cybersecurity startup, attracted a $65 million investment from UK private equity group KKR in the month after the vote, and according to Beauhurst, the largest deal of the summer was a raise of £210M for Deliveroo. Of course, the depreciation of the pound has helped foreign companies buy into the UK!
- Tech and digital businesses have received and continue to receive a lot of support from the government including tax credits for research & development and early stage investments scheme (SEIS and EIS). Nissan, the Japanese car maker, has indicated it will build its next models in the UK, following government assurances, especially in the area of green energy and electrical cars.
- Many tech companies are exporting companies. They are currently benefitting from the devaluation of the pound, making British goods and services more attractive overseas. Conversely, if the tech business is paying for services in dollars, then, it is more expensive. However, the sector has an advantage over the traditional bricks and mortar manufacturing businesses as it does not have to import components etc.
- The tech sector in Britain relies quite heavily on international talent. Leaving the EU will force UK to address the issue of skilled immigrant labour. The UK’s digital economy is growing at a whopping 32% faster than the rest of the UK economy. The specialist skills for tech workers are not widespread at present. It is not likely to be an issue in the long term as primary school children are learning how to code. The benefits of this will be felt in the next decade. In the short term however, fast tracking visas for international workers will become necessary if the freedom of movement is curbed as a result of Brexit.
- European cities are raising their game – European capitals are doing their best to lure away startups or have them co-locate across Europe. In doing so, they have to improve business conditions in their own cities. This raises the bar for the whole of Europe’s tech community and underlines that Europe is a great place for companies to base themselves.
Brexit is going to be a challenge we will all have to strive to overcome. The success of technological and digital businesses will be to ensure it remains competitive and fair. Britain is already laying a foundation for the tech companies to give them every chance of success. It is unlikely that Brexit will devastate technology companies – quite the contrary. I believe the British technology sector can only become stronger in future.