The UK tech industry’s response to Brexit
With the exception of Sir James Dyson, who rebuffed as “absolute cobblers” the Remain campaign’s claim that leaving the EU would destroy trade, you would have been hard-pressed to find a UK tech company or CEO that supported Brexit.
Why, you may ask? Surely the EU’s VAT rules (#VATMESS, as it has become known), data protection laws and employment protections have stifled the UK tech industry rather than promoted it? Well, it would seem, the majority of UK tech companies consider the benefits of access to the Single Market (not to mention the potential of the Digital Single Market) and the EU’s talent pool to outweigh the costs of membership (it is no secret that tech firm’s have relied on the free movement of UK workers where it has not been possible to find home-grown talent).
Almost immediately after the referendum verdict, there was a slide in the share value of leading tech and telecoms businesses (which, it has to be said, was not unique to those sectors); leading tech firms such as DueDil and TransferWise suggested moving their headquarters out of the UK; and leading IT research consultancy Gartner cautioned against a 2-5% decrease in IT spending over the next 12 months. Tech hubs from Berlin to Dublin began to reflect on how Brexit could create opportunities for them in replacing London as the ‘Digital Capital’ of Europe.
It was only a matter of time before fears of the industry’s decline would be given its own title: ‘Texit’ (which, it seems, has been adopted by the Texas Nationalist Movement).
However after the initial shock of Brexit had sunk in and share prices began to rebound, the sector’s leading lights rallied together in a call for optimism, with VC firm Atomico urging firms to “Keep Calm and Code On”.
So what will Brexit mean for the UK tech industry? The stock answer seems to be that ‘it is too early to say’. However we can, at least, be certain of uncertainty in terms of investment, the extent to which the UK will have to reform its data protection laws to access the Single Market, recruitment and the impact on consumers.
Our view is that the tech industry is characteristically agile, robust and entrepreneurial. Many have predicted the burst of the ‘second dot-com bubble’ for the past few years, the effects of which could be broader and deeper than the Brexit fallout if they are proved to be true. But if any sector will find a way to weather the Brexit storm, it should tech.
Our role as lawyers, therefore, is to ensure that we closely monitor the progress of negotiations with the EU and the implications for our clients in the Digital Media & Technology sector, so that we can provide relevant advice and guidance. The easiest way to keep in touch is to sign up to our Digital Media & Technology mailing list.
We will therefore leave you with some links to statements from industry bodies and key stakeholders in the tech sector: