How will Brexit impact the UK Tech and IT industry?

Britain has formally left the European Union on 31st January 2020.

The United Kingdom makes up 1% of the world population and only 3% of the global GDP. Therefore, the impact of Brexit on tech policy and IT markets might not be huge.

Ross Anderson, a professor of security engineering at Cambridge University and a fellow of the Royal Society, has written that the EU has the real clout and calls the shots on privacy and competition law. The rules and standards set in Brussels would have a huge and continuing influence on the UK IT industry. “Brussels is the world’s privacy regulator, since Washington doesn’t care and nobody else is big enough to matter,” he writes.

“If you want someone to police the side-effects of network effects and globalisation, the European Commission is just about the only sheriff in town.”

– Ross Anderson, Cambridge University

However, experts believe that it will still impact technology firms operating within Britain in a variety of ways.

Illustration: Chris Riddell/The Guardian

Data residency

There is uncertainty about how technology organisations in the UK will handle and process data of European customers. The UK firms might be pressurised to keep the personal data of EU customers in European datacentres and this might lead to the multiplicity of data storage and IT operations across the border.

Multinationals operating out of the UK will, of course, not appreciate new barriers to the free movement of data between UK and EU countries that hinder growth and innovation. This might also lead to higher costs and vulnerabilities for the data – at rest as well as in transit.

Starting problems

The UK has a large and vibrant community of tech startups, especially in London. Post-Brexit, UK startups will be more expensive. They will need to additionally comply with other privacy laws apart from the EU privacy laws and might need to keep more of their development staff overseas if visas become harder to get.

The venture capital that helps these startups could also be under threat. Jon Moulton, founder of private equity firm Better Capital, told The Financial Times that the Luxembourg-based European Investment Fund is the largest investor in UK venture capital firms and warned the European fund “would probably stop investing in the UK” if Britain left the EU.

Access to talent

UK organisations routinely employ EU nationals, but Brexit might close the doors for talented IT professionals, engineers and scientists with the new immigration policy.

In a letter to The Times, Microsoft founder Bill Gates claimed that Britain would be a “significantly less attractive place to do business and invest” in the event of a Brexit. Gates had said that Cambridge, where Microsoft has one of its five Microsoft Research labs outside of the US, would be a less attractive place if the UK left the EU, as it would be less open to foreign staff.

Of course, UK’s loss could open opportunities for other countries as well as increase UK organisations offshoring their development and operations outside the country.

Robbie Clutton, Head of Pivotal Labs EMEA, had stated that UK may lose its position as Europe’s leading hub for technology talent post-Brexit.

Apart from access to skilled professionals and venture capital, organisations in the UK and elsewhere in Europe will need help in identification of the right place to host data as well as continuous compliance and governance. If you’re in such a conundrum, let’s talk?