An industry waiting with baited breath until the nation casts its “in” or “out” vote next week, if rumour is to be believed London’s tech and digital sector has a lot to lose. Among the worst knock-on effects making headlines are a Brexit induced economic slump, and a lack of investment in innovation. Perhaps more pie in the sky is the theory that we’d have a mass exodus of skilled workers on our plate too.
One thing that’s undoubtedly at stake is our national pride. Naysayers and optimists alike are wondering if the UK will be able to hold onto its top spot as the digital capital of Europe in a post-Brexit world.
In its 2014 report London Futures, Deloitte declared London as the digital capital of Europe. This assertion was based on the fact that, at the time, 60% of the top 250 companies from outside the EU chose to base their European operation in London. Laying what some could call the foundations for London becoming the digital capital of the world one day, the study went as far as to highlight that London had greater pre-eminence in Europe than New York had within North America.
In the years that have followed, London, and the wider UK, has continued to dominate Europe’s digital stage with the largest tech market in the continent. Approximately 1.46 million Brits are employed in digital and tech roles, with the digital economy heralded by the likes of Tech City as key to economic growth, employment, productivity and the digital disruption of traditional industries.
Before a Brexit referendum was even on the table, the government estimated that our digital market will grow at a rate of 5.4% by 2020, with an additional 1.4m digital workers required over the next five years to meet market demand.
Keep calm and carry on
As the date that the UK could vote to jump ships looms large, several industries are speaking for or, indeed, against a possible exit from Europe’s premier club. Take for example the opinion of almost 3,000 senior members of London’s tech industry. A poll of Tech London Advocates found that 87% were against Brexit, 10% were undecided and only 3% openly welcomed a departure.
A slam-dunk for the “in” camp, pragmatists would argue that as the digital industry is so directly linked to the future of business in the UK, creating jobs almost three times faster than the rest of the economy, the effects could be far-reaching. And yet while no one is under any illusions that the UK sits in an ivory tower, it’s hard to fully believe that an exit would spell the apocalypse for digital that some are predicting.
For in spite of the industry’s clear achievements and the UK’s European dominance, our digital sector’s been facing some teething problems for some time. Chief among them is a shortage of skilled digital workers who can fill current roles and those that will emerge in spaces like; mobile and cloud computing, cyber security, big data and analytics, automation and data protection. While exposing what could be the Achilles’ heel of the UK’s digital ecosystem in decades to come, a Brexit will not in and of itself drive the UK’s digital economy to a standstill.
To combat a lack of free passage for skilled EU workers, which let’s face it would be an issue, the UK will have to look inward and re-skill and retool the workforce. Particular attention will need to be paid to the younger generations as according to the World Economic Forum, “65% of children entering primary school today will end up working in new jobs that do not yet exist”.
Although London is currently Europe’s leading centre for high-skill employment it’s been speculated that global businesses would likely (re)locate to Berlin, Paris and Stockholm in the wake of an exit. While this is of course a possibility, it seems a tad dramatic to think that the majority of UK-based international businesses would flee to mainland Europe the first chance they get. Large-scale businesses dream of being that agile and, depending on the company, such knee-jerk reactions could prove extremely cost prohibitive. Think back to earlier this year when amid threats it might move its operations to Hong Kong, HSBC’s board voted to remain in the UK, in spite of the Brexit “threat”.
It’s also possible that the UK’s close proximity to Europe will continue to serve it well, and businesses will stay because they already know how to navigate British business culture. Let’s not forget, language barriers could also play a part in keeping Britain’s biggest tech industry customers in Britain.
As the UK will have to wait out a likely two-year notice period, if the nation votes in favour of Brexit, there will be plenty of time for the government to negotiate the best deal for the digital industry. There will likely be several options on the table such Norway’s European Free Trade Association (EFTA) model, Canada’s Comprehensive Economic and Trade Agreement (CETA) model or a new bilateral trade agreement that’s tailor-made for British interests.
At this stage anything could happen and the UK could end up with the best of both worlds, with a Brexit in fact helping to future-proof the UK’s digital economy in the longer term.
If the UK can make it as easy as possible for businesses to trade with Europe from our shores, while focusing on the necessary education and training to plug the skills gap from within, it could not only stay in the spotlight of the world’s tech stage but become stronger as a result.
While it’s relatively obvious that a Brexit will more than likely leave the digital industry discombobulated in the short-term, after a period of adjustment it could be just be the move needed to enable us to checkmate America, further establishing the UK as the digital capital of the world.