The tech sector was a major voice in favour of the UK remaining part of the EU. There were fears that an exit from the European Union would cause investment to shift to tech companies outside the UK, uncertainties about the status of EU nationals working in the UK, the acquisition of new talent from the EU and tech companies choosing to have their headquarters elsewhere.
We would like to look at where we stand today with regards to the tech sector and the developments of the Brexit negotiations.
2016 saw a record high in investments, with more than £ 6.7 billion being invested into UK tech companies, leading Europe in merger and acquisition activity. While investment did slow down after the June 2016 referendum, the fall wasn’t as drastic as expected and was not necessarily attributed to the vote on Brexit, seeing as there was a general fall in tech funding, not just in the UK.
Today the UK remains top of the list when it comes to capital invested by quite a large margin to European countries such as Germany and France. Nevertheless, this margin is shrinking and the UK is the only country where more founders say it was harder to raise investment in 2017 than 2016.
The recent budget announcement included a large amount of government investment into the tech sector, as an attempt to tackle possible losses due to Brexit.
2. Tech companies relocating
The continuing uncertainty regarding trade deals between the EU and the UK, mean that existing UK based companies consider relocating to Europe if the UK leaves the single market. European founders, on the other side, also no longer see the UK as an attractive base for their companies’ headquarters. But is that really the case?
The European tech scene is evolving and beginning to build its own ecosystem independent from what’s going on in the UK, US or elsewhere but that certainly doesn’t remove the UK as a major player in the global tech scene. UK tech companies will continue to have advantages, such as London fintech companies being located in the world’s biggest financial centre, with direct access to a huge b2b market that London offers.
3. EU nationals working in the UK
After much insecurity regarding EU tech workers’ rights to remain in the UK, the recent reciprocal deal agreed between the EU and Britain certainly caused a sigh of relief in all sectors of business, not least the tech sector, with almost 200,000 EU citizens contributing to UK tech.
EU citizens’ rights to live and work in the UK have been guaranteed including the rights of a range of family members to move to the UK. This of course makes it easier on employers, who up until now did not know, which of their employees would be able to continue working for their companies and how much they would need to re-staff their offices. It also adds to more certainty for new potential talent to be recruited before the March 2019 deadline.
Another concern of the tech sector was the amount of time an EU national could live outside the UK, before losing settled status. Originally this was set to be only 2 years and has now been increased to 5. For tech companies this is a big improvement as they regularly second staff across a global network.
To sum up…
While the tech sector was not a fan of Brexit, the actual results seen at the moment are not as bad as expected. The deal guaranteeing rights of EU citizens in the UK, is a major break-through in favour of the future of the UK tech sector and while leaving the single market may be considered a disadvantage, there is plenty of room left for positive development of the UK tech sector, still seen as a world leading hub for technology.
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