What does a Brexit mean for the IT industry?

30 June 2016  |  Admin

Now the UK has decided to leave the European Union, technology firms have been left to wonder what the future holds.

As news of Brexit broke, tech firms including BT, TalkTalk and software firm Sage reported share price falls.

For years, the UK - and particularly London - has championed the role of tech firms in buoying the economy.

Hundreds of start-ups have benefitted from the government's Tech City initiative, for example, and both employees and customers have been plucked from EU member states.

Much was once made of British companies' potential to compete with Silicon Valley - hence the nickname of the London hub of "Silicon Roundabout".

Earlier this year, the Tech City cluster of businesses reported that 1.56 million people were employed in digital companies in the UK, with 328,000 of those in London.

The report also noted that the digital economy grew a third faster than the UK economy as a whole.

But does this success now hang in the balance?

"I have concerns that the local market might slow down," said Drew Benvie, founder of London-based digital agency Battenhall.

"Over recent years, it's been clear to anyone in technology that London has become a major technology centre - all the major tech companies have big offices in London."

Mr Benvie, who employs 34 people, also told the BBC he was concerned because many of his staff are EU citizens or present in the UK via EU visas.

While he believes that trade will ultimately overcome boundaries, he said: "Uncertainty just does not help."

A survey of 1,000 European and British businesses by London law firm Pinsent Masons found that only a quarter had a "tangible plan" for dealing with the risks arising from Brexit.

"The vast majority of large technology companies have invested in a presence around the Reading and outer London area," said Theo Priestley, a Scottish tech evangelist and start-up mentor.

"The Brexit vote does call into question whether that remains as a sound decision."

 

In a statement, trade body TechUK, which represents British tech firms, expressed disappointment at the referendum result and said: "Without the benefits of EU membership, the UK needs to be at its very best to succeed."

Then there is the issue of EU funding - many firms, such as C-Tech Innovation in Chester, participate in collaborative research projects on future technologies that benefit from EU sources.

The EU and tech in the UK - by numbers

Some have met the news with optimism, however.

"Technology is a sector that will only increase in importance and works without borders," said Tudor Aw, head of technology at KPMG UK.

"I therefore continue to see the UK tech sector as one that will not only withstand the immediate challenges of the referendum result, but one that will continue to grow and thrive."

And David Cameron's former adviser Rohan Silva, who is credited with helping to forge Tech City in the first place, tweeted a rallying cry: "I also believe that Britain will always be open, creative and entrepreneurial."

 

Credit : BBC News