Brexit: What does it mean for UK's technology sector?

A British exit from the EU, dubbed a Brexit, has been a source of much debate in the UK, with many differing opinions presented.

Some offer a clear view that leaving the European Union would damage the UK economy and business. Others maintain that leaving the EU does not have to be detrimental to the interests of the UK and can even be a liberating factor, enabling the UK to break free of the EU bloc and realise its full potential as an individual sovereignty.

The reality is that, for UK businesses, especially those operating within the tech sector, the EU represents an important resource for business growth, recruitment, and single market operations. Europe is an important source of talent for the UK that has been experiencing nothing short of a skills crisis in technology. Removing this flow of talent and expertise could deprive UK tech companies of an essential ingredient for sustained growth, something which has the potential to be a limiting factor for young tech start-ups in particular.

Effect on sourcing qualified talent

As a member of the EU, the UK has access to a talent pool of approximately 400m individuals. Yet, even with the increased access to talent from the EU, the UK is still not addressing the demand in the industry for skilled IT professionals. If the UK technology sector loses the ability to hire EU citizens with the same ease as is currently allowed, this can affect the growth and ability to innovate of many tech companies, large and small.

One potential remedy that British tech companies could look to put in place to offset the effects of a Brexit is the creation of internal academies. These in-house training schemes could hire apprentices or young graduates and train them in specific fields that the companies operate in. The graduates would be able to choose which areas to focus on, based on their experience and interests. Furthermore, companies will enjoy a workforce developed from the bottom-up and educated on all the different facets of the company’s operations.

The position of the UK in global business

The UK is a chosen location for global companies looking to set-up headquarters in Europe. This might be because of the UK’s reputation as a centre for business and finance services, but also because of its position in Europe. It is viewed as a gateway to Europe, but with a more business friendly environment that looks to favour technology and digital growth.

Should a Brexit vote result in the UK leaving the EU, this would likely affect the UK’s standing in global business. The loss of a connection to the single market of Europe could remove existing benefits such as free movement of workers and reduced bureaucracy when it comes to business and operations.

Greater impact of a vote to leave

A Brexit could result in tech companies based in the UK, engaging in a mass exodus to return within the EU fold in places like Berlin or the Nordics. These two locations are some of our closest rivals when it comes to technology growth and our loss through an EU exit might well be their gain.

The wider impact could see the UK tech industry, which currently equates to 10 per cent of the UK’s GDP, reduce in size and influence in UK business. In recent past, the growth of UK tech companies has been greater than GDP growth, highlighting just how much of a thriving sector this is for the UK.

The lasting impact of the Brexit remains unclear, but it is inevitable that there will be a significant change for the UK tech sector should UK vote to leave, and that impact could shape the technology landscape for years to come.

Ian Parslow, SVP at MTI Technology

Image source: Shutterstock/Lucian Milasan