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What does Brexit mean for the UK tech industry?

With prime minister David Cameron having confirmed a June referendum that could lead to the UK’s exit from the European Union, sovereignty and border control have become the battleground discussion topics.

But, whilst many will debate these emotive issues, it is the economic impact which should take priority.

For those of us in the UK technology sector, which this government had charged with being an engine of overall economic growth, “Brexit” would be disastrous.

If the UK leaves the EU, every cross-border contract would be torn up and have to be renegotiated - but the ramifications are even wider than that.

People power

As a financial technology startup based in Canary Wharf, my company is typically cosmopolitan. I am Estonian, my data teams are Finnish, we have representatives in Poland and Spain; like most startups, we hail from all over the continent.

I could never have brought Big Data Scoring, or myself, to the UK without the freedom of movement that is bestowed by EU membership.

A Brexit could potentially create barriers to the kinds of people who are creating innovation and opportunity by fuelling the UK startup sector.

Right now, we have an open vacancy for a data scientist - an ad that is drawing applicants from around the world. We are competing in a global market for talent. If there are immigration restrictions between Britain and the rest of the EU, many of these people will simply go elsewhere.

Across the country, it’s estimated that the Science, Technology, Engineering and Maths worker deficit is over 40,000 a year, a figure that threatens the future economic well being of the country. Latest government figures, published at the start of the year, suggest that the skills gap - and the number of vacant positions due to firms being unable to find people with the skills or knowledge to fill them - has risen by 130 per cent since 2011.

If we create additional continental paperwork, require extra work permits and so on, many European companies may never consider the UK as their next office location. Instead, the beneficiaries may be Berlin, Stockholm or Frankfurt.

Common market

For startup companies, the ability to scale up fast is a cornerstone to building a fast-growing, international business. But for this to be a workable reality, a common marketplace is the top of our wishlist.

In the US they have that in spades; a commonality across all 50 US states that puts the world’s biggest market on their doorstep from day one.

On this side of the Atlantic, we’re seeing foundations being laid: the framework of uniform legislation within the EU, but there is still some way to go. Stepping back from a goal of a unified structure means we’ll never create a model that can effectively compete with Silicon Valley.

Regulation frameworks

As things stand, EU membership brings companies - especially those in the technology space - an increasingly coherent set of regulations that unify business opportunity in the digital world.

The European Commission’s ongoing Digital Single Market initiative is breaking down barriers, reducing mobile roaming charges and helping consumers watch their favourite video content while travelling across the continent.

In our sector, big data, we benefit from a single rule governing how we should keep, store and move customer data, whether it is on a server in Lithuania, the UK or Portugal.

Unified frameworks governing privacy, data collection and intellectual property don’t just make life easier and safer for users - they make it simpler for companies like mine to roll out in multiple markets. Fragmenting these agreed rules will mean that companies have to assess and develop their existing policies and ways of working to meet legislation in multiple countries. Again, this will make it harder and more expensive to expand into new markets.

All this makes it less likely that companies like ours will be able to create growth and wealth in the UK.

London calling

London is rightly considered a European financial centre, a fact that draws companies like mine from all over the continent. When we were deciding where to locate, London won over New York, thanks to many of the reasons above.

So, to see London’s mayor, and his would-be successors, campaigning for “out” is dismaying. With months to go until the referendum, even this sentiment is likely to have a chilling effect, as many companies that were considering spending here wait until the outcome of the vote is clear. Put simply, European expansion to the UK may already be on hold.

While, in the event of Britain actually leaving the EU, London would put up a good fight to retain and attract European startups, the city would be hit nevertheless. Many companies here may consider moving jobs to other countries on the continent instead.

Vote “in”

It is true to say that Europe is in pretty bad shape right now. The refugee crisis, the recent economic crisis, burdensome debt levels in some member states and looming financial turmoil have all conspired to cast gloom and doubt over our futures together.

But we should not let these clouds cast a shadow over all the benefits membership brings. By focusing on the negatives, people will miss the clear economic advantages of European integration.

Let us not forget that everything is cyclical. It is not beyond the wit of Brussels and Strasbourg that many of these issues will be fixed. When the gloom lifts and the benefits become evident once more, the UK may wish that it had not pressed the “exit” button.

So, I urge all in the technology community, and all voters - vote “fix it”, not “Brexit”. Choose “in” for growth, not “out” for a backward step.

Erki Kert, CEO at ‎Big Data Scoring

Image Credit: Flickr/Sébastien Bertrand