After several false starts, today is the day that the UK officially leaves the European Union, marking the start of an 11-month transition period.
However, despite some degree of closure, with the UK now tasked with negotiating an EU-UK trade deal, as well as pursuing trade deals with non-EU countries.
Although the prospect of a no-deal Brexit is now off the cards, the outcome of these trade negotiations will determine the extent to which industries are affected.
Back in 2016, nine in ten senior tech workers in London, surveyed by Tech London Advocates, supported remaining in the EU, but since then, the UK tech industry has enjoyed significant growth.
According to Tech Nation, the UK tech sector received a record investment of £10.1bn in 2019. Whether this will be affected once the transition period comes to an end is currently uncertain.
“Although the UK will be leaving the EU on 31 January 2020, the nature of our relationship with the EU after our departure will not be known for some time. In the transition period, nothing much will change – our relationship with the EU will not change for until the end of 2020,” says Frances Doherty, partner at the international law firm Dorsey & Whitney.
“The technology and innovation sector, for so long a key part of the British economy, will be impacted but the true extent of the impact will not be known until the nature of our ongoing relationship is settled.”
Tech jobs post-Brexit
According to research from TopCV, Brexit will cause greatest harm to the marketing, media and design sector, which will see a quarter of its workforce up and leave to advance their careers, followed by workers in science and education at 21%, engineering and construction at 18%, project and programme management at 17% and technology at 16%.
This may be a smaller proportion than other sectors, but the UK tech industry cannot afford to lose much-needed talent, with 70% of the tech industry experience skills shortages, according to research by recruitment company Robert Walters.
In this context, Amanda Augustine, careers expert at TopCV says: “Our research reveals incredibly dire implications for Britain’s tech sector. We have some of the brightest minds and most creative startups in the UK, so for 16% of that talent to leave would be shocking. Hiring and retaining the right staff, even in the steadiest of times, can be tough. Employers will have to identify creative ways to incentivise their employees to remain in the UK – and quickly.”
However, Augustine believes that this may create opportunities for those wishing to enter the tech sector: “as a silver lining, there are numerous ways those wanting to break into these industries can leverage Brexit as an opportunity to advance their careers as a result of new vacancy openings.”
Once the transition period is over, freedom of movement will most likely come to an end, with EU residents needing a visa in order to live and work in the UK. This risks deterring workers away from the UK and towards other tech hubs.
Russ Shaw, Founder, Tech London Advocates & Global Tech Advocates believes that immigration policy will be a major factor in attracting talent:
“The tech community will also be keeping a close eye on post-Brexit immigration policy. The Migration Advisory Committee’s recommendations this week to lower the salary threshold are welcome, particularly for international students who want to transfer to a Tier 2 visa after their studies finish. However, the Government must do more, further lowering the threshold to help the UK’s thriving tech start-up community and immediately abolish the cap on Tier 2 Visas altogether. The introduction of a Global Talent Visa is a step in the right direction to attract exceptional talent here, but it remains to be seen whether supply will come to meet demand in a sector crying out for skilled talent.”
An additional complexity is presented by the issue of data. With the UK set to adopt its own version of GDPR, whether data flow, which many organisations rely on, will be interrupted by Brexit remains a key issue for the sector.
According to Data Economy, over a third of IT decision-makers say interconnection is key to the survival of their business, but data centres have continued to open in the UK, such as Equinox’s £90m data centre in London.
“For Britain’s tech sector to sustain growth, the Government must address how services will work after departing the EU and how the UK can come to remain a benefactor of the Digital Single Market. The new Government has also indicated that regulation in certain sectors has started to diverge from the rest of the EU – digital must not follow suit. For example, we must stay fully aligned on GDPR.
“A failure to firm up legislation on data flows will have a significant impact on the tech sector. Tech businesses are most reliant on data flows and any disruption to such a crucial sector to UK economic growth could be catastrophic. Without an adequacy decision from the EU, organisations will have to rely on costly, ad hoc legal mechanisms to allow lawful data transfers. This would create a significant challenge for smaller businesses that want to do business in Europe but can’t afford to absorb legal costs. The Government must treat data flows with the same urgency as other trade agreements, or risk undermining innovation.”
Supply chains and manufacturing
Mark Hughes, Regional Vice President UK & Ireland, Epicor said that manufacturers are faced with continued uncertainty, but this could in fact lead to greater innovation:
“As manufacturers call for more clarity around our post-Brexit trading relationship, they will need to be ready to respond rapidly and appropriately to changing market conditions. That includes having a technology platform that is robust, responsive and flexible–with the ability to respond to changes within the supply chain. Reliable business software can provide firms with ‘on demand’ information for performance data analysis, so that they can plan, and revise plans, accordingly. This will enable them to not only maintain market share, but thrive and grow in the global economy.
“Far from being a stumbling block, Brexit could actually be a driver for change. Manufacturers are taking matters into their own hands, forging ahead with optimism and inward investment, to ensure they can continue ‘business as usual’, no matter what is thrown at them. However, taking that opportunity demands major change for many manufacturers. With the right technology, firms will be able to travel the long road running through the current landscape of market turbulence and reach the rewards on the other side.”
Verdict deals analysis methodology
This analysis considers only announced and completed cross border deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.
GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.
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