The year 2017 was a particularly strong one for the UK’s booming tech sector. With a record amount of money flowing into the industry and the UK topping the tables on many metrics as a location for technology, things are looking bright. However, the global tech industry becoming highly competitive, countries such as China rising up the ranks, and a recent survey commissioned by the Mayor of London from Cambridge Econometrics has warned of the potential risks of Brexit to the UK tech industry, not least the potential loss of jobs. Now is not the time for the UK to sit back and relax, says Mark O’Connell, CEO of OCO Global.
As a truly global city, London has long been a leading magnet for top technology firms and talent. The vibrant industry also seems to be fairly ‘Brexit-proof’ and has seen sustained growth in areas such as software and communications in the past year. Foreign direct investment into the industry has bucked the overall trend of decline across the UK since the UK-EU Referendum, according to fDi Markets figures from October and recent research commissioned by London & Partners.
These figures demonstrate that London is still the most popular destination for investment into technology firms in what was a record year for UK investment. Meanwhile, some of the world’s leading tech giants have gone ahead with pledging their long term commitment to London and the UK, including Google which hailed Britain as a “great home” when it broke ground with its new £1billion London HQ. Similarly, Amazon announced it would create 5,000 new jobs across the UK, bringing its headcount to more than 24,000.
However, there’s little doubt that the wider picture and global landscape is becoming more complicated. In the highly mobile age we now live in, the global economy is becoming more and more competitive and the nature of the technology industry, characterised by cross border collaboration and innovation, is arguably both an opportunity and a threat.
The Brexit vote presented a gift-wrapped opportunity for European capitals to step up their game in attracting talent, with cities like Berlin being particularly vocal in wooing technology start-ups since the referendum. More and more cities around the world are transforming into technology hubs and becoming increasingly attractive for technology-rich investment, SMEs, global entrepreneurs and start-ups. Tier 2 cities, such as Berlin, Tel Aviv and Stockholm have experienced growth in sectors such as fintech and cybersecurity, and Paris’s tech scene is also growing, with Macron committed to building France’s technology ecosystem.
The big ticket for maintaining a thriving technology industry in the future will be assessing what the next generation of global tech talent wants from the location where they work, in order to harness their skills to create new growth and investment.
While it’s far from a precise science, one leading thinker and author of ‘The Rise of the Creative Class’, Richard Florida, argues there are three key ingredients to a successful city: talent, technology and tolerance - a concept he called the ‘3T approach’. This model has become widely used by urban policymakers and economic development agencies around the world to boost creativity agendas and attract investment in highly creative areas like technology.
Florida argues that those who are highly creative, for example software designers, tend to prefer and thrive in cities constituted by advanced technological infrastructure, for example those with major universities. On many such measures, the UK is a world-class location with its leading universities, research base and a competitive tax regime. However, policymakers need to work harder on building a top quality digital infrastructure. The Digital Strategy launched in March last year promised to ensure the UK has the necessary infrastructure to compete in the future, however it lacked a long-term vision to make that a reality.
Meanwhile, The Industrial Strategy launched at the end of the year was more of a leap forward, promising to make the UK “the world’s most innovative nation by 2030”, however as the CBI put it, it shows we’re at the beginning of the race, not the end. While artificial intelligence was selected as an area for one of the four ‘sector deals’ to boost growth, it must be taken a step further to align with verticals where the technology can improve efficacy and speed, for example in data processing related to financial services and healthcare.
In my experience, technology investors tend to look for locations with liberal values, green ethics, inclusivity and affordability. It is inevitable that the outcome of the UK’s departure from the EU will create uncertainty, making decisions for those working in the industry more difficult, and potentially affecting the UK’s reputation as a place of tolerance and inclusivity. The key for future success is therefore for London and the UK to demonstrate how it can continue to evolve and meet these demands.
One study by the recruiter Hired suggests the result of the referendum is already having an effect, with a majority of those surveyed saying they were ‘dissuaded from relocating to Britain since Brexit had made UK a less desirable place to live’. Indeed, the US faces a similar challenge given the changing policies on immigration. The task ahead for policymakers is to offer incentives and reassurances that will continue to make the UK an attractive option.
There’s no doubt that challenges lie ahead, particularly when it comes to attracting the technology talent we need in the UK to compete globally. But if the UK can get the fundamental aspects of talent, technology and tolerance right – even in the face of Brexit, we will be well-placed to attract to continue with the momentum of 2017.
Mark O’Connell is CEO and founder of OCO Global
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