Brexit: UK tech sector reacts to Leave vote
Posted by Damien Biddulph on Tue 28th Jun 2016
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".
In 2012 the Chancellor, George Osborne, visited the Google Campus start-up hub and meeting centre in East London 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.
Drew Benvie employs 34 people in London - he's concerned about post-Brexit uncertainty 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."
Start-up mentor Theo Priestley thinks tech firms clustered in and around London may be disappointed by Brexit 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 20% of digital businesses say that EU countries besides the UK are an important source of talent Over half of European financial tech "unicorns", such as TransferWise and GoCardless, are based in the UK There are 21,000 jobs across the EU in mobile gaming - the UK has the largest single share with 5,000 full-time employees 5m euros (£4.1m) in prizes available for the development of clean tech from the European Commission's Horizon 2020 programme In total, the British private sector received £1.4 billion in funding from the EU in 2013 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."
Rohan Silva, who helped to found Tech City, tweeted an optimistic take on the referendum
How will London's position be affected, specifically?
There's always the possibility that some of the more mobile firms in the British tech sector will simply find it easier to migrate to hubs in the EU. That's the hope of the German Startups Group, at least. "We expect a significant decrease in new incorporations in London in favour of Berlin, as well as an influx of successful London start-ups," said chief executive Christoph Gerlinger. And Mr Priestley thinks that in the event of a Scottish independence referendum that leads to reunification with the EU, it's possible some start-ups could move north of the border, perhaps to rekindle "Silicon Glen" - a 1980s attempt to compete in the semiconductor industry. One London business, Techspace - which offers co-working spaces for new, fast-growing companies - has itself just announced an expansion in Berlin. But chief executive and co-founder David Galsworthy said that, given how "interconnected" the world is, he had little doubt that London would continue to be "a central hub globally for this sector".