The vote for Brexit is perhaps one of the most important decisions the UK has had to make in recent years. With the referendum under two months away, both sides of the vote are speaking loudly about the benefits and drawbacks of the UK leaving the EU.
A Brexit vote could lead to some immediate cost saving, as the UK would no longer spend on its required EU budget contributions. Equally beneficial are the obvious border control benefits, as we will be able to control our own borders as an independant country.
However, the concern of many founders and investors is the UK will lose it’s place as a digital leader and the financial impact on our economy as a Nation could be detrimental.
The UK has established itself as the leading digital nation in Europe with a turnover of £161bn reported in 2014, which is a 32% faster growth than the rest of the UK economy between 2010-2014. What we are seeing, from an industry perspective, is the benefits from a EU exit not outweighing the potential negative impacts. This comes down to one key word: ‘uncertainty’ and from uncertainty is where the tech industry is growing concerned.
Freedom of Movement – Recruitment
There is a lot of be said for the freedom of movement we have at the moment. The talent that can be sourced from overseas is invaluable to the startup community. The pool of candidates employers can currently choose from makes it very easy for startups to create the best team to push their business forward.
Writing for the London School of Economics, Professor Adrian Favell states that limiting freedom of movement would deter the “brightest and the best” from the continent, coming to Britain to join and help push our fast growing startup industry forward.
This, of course, works the other way, as free movement across the EU opens job opportunities for British talent which would otherwise not be easily available and feeds back into our ecosystem.
Gerard Grech, CEO of Tech City, believes leaving the EU would be a big mistake, stating: “Digital businesses are very clear about the fact that when you look at the population of Europe, the talent pool is 400 million people which is comparable to the talent pool in the US, which is about 350 million people,”.
Freedom of Movement – Trade
The current access to the EU single market works very well for UK businesses. 7 out of 10 digital founders, investors and startups are insisting that leaving would mean a loss of easy access to the EU’s 500 million consumer single market. This is a big blow for growing businesses who operate in Europe as well as the UK, with EU countries buying 44% of everything we sell abroad.
Direct Foreign Investment
Where the immediate effects of a Brexit vote will be felt, is with investment. With a prolonged period of uncertainty over Britain’s voted status, comes a discouragement to invest, especially direct foreign investment, of which Britain is the biggest net recipient in the EU. Currently we get a 5th of all funding from trade and investment from the EU which accounts for £billions across many industry sectors, including tech.
In a recent open letter published in the Financial Times, over 200 UK startups, entrepreneurs and household names warned that a vote for Brexit would be “hugely damaging”. Signatories including founders of tech successes Deliveroo, Transferwire, Zoopla and King.com to established companies such as Dominos Pizza UK, Jack Wills and Travelex argue “it is better to be on the inside helping shape the rules of this market instead of just being subject to them.”
Full letter and list of signatories can be found here
We could continue to discuss the other key points such as: Financial Regulation, Data Protection Laws, Digital Services and VAT, Services Export, Credit Rating etc. However, we have a professional opinion and we must cement the voice of the UK’s business community and surmise with this quote:
“The UK is currently the best place in Europe to launch and grow a business; leaving the European Union will undoubtedly undermine the ability to Britain’s entrepreneurs to start-up, innovate and grow. It is simply not worth the risk.”
Here are some more articles on the impacts of Brexit on startups: