A recent report by The Guardian revealed the shocking news that four in ten tech companies are strongly considering moving abroad following Brexit (Britain’s decision to leave the European Union). Within London, as well as in growing tech cities such as Cambridge, Manchester, and Newcastle, there are concerns that continental European tech hubs like Berlin may benefit from Brexit and leave Britain in the dust.
The tech sector isn’t the only industry that is expressing concern about Brexit, but it has been one of the most vocal opponents of the decision to leave the EU. But why are tech workers especially worried?
Why Uncertainty Isn’t Helping
A big reason why technology companies are concerned is that their businesses rely upon many of the rules and regulations that the UK has agreed to as part of the EU. This includes regulations such as the GDPR (General Data Protection Regulation) as well as how copyright and privacy laws are enforced.
The uncertainty is only exacerbating the problem for many tech firms. Looking at the timeline of the Brexit negotiation talks, you’ll see that the UK is officially set to leave the EU in March 2019. However, in October 2018, the EU October summit ended with no critical agreement. With just over a month to go until the UK’s departure and with nothing set in stone about the UK’s future on its own, tech companies don’t know how to plan and secure themselves.
Also, many tech companies in the UK are start-ups, such as Bulb, Simba, and Mous Products; companies that have pulled themselves up by the bootstraps and have found success thanks to a winning idea. So, it will only have dinged their confidence to see that the performance of the FTSE 100 has been incredibly volatile since Brexit was announced. Looking at the performance of the FTSE 100 between October 2018 (the date of the failed Brexit negotiation talks) to early 2019, you’ll see that the stock index seems to be quite low.
There are also big questions over how tech firms in the UK will (or won’t) be able to attract new talent. There are hundreds of millions of people in Europe and, thus, potentially millions of talented people who could have the ideas and skills to take UK tech start-ups to the next level. But, with Britain leaving the EU, they are unsure if they will be able to move to the UK or even find stability once they get there.
How the Markets Are Reacting
There are indications that some tech firms, including the UK games industry, are taking conservative measures in response to the Brexit news. The end of the free movement and a fear of a rise in tariffs could “sabotage” the UK games industry, and it’s understandable if some tech companies are holding back on expanding because of this.
Now, Britain’s tech firms are unsure of what to do. With negotiations still ongoing, it may be quite some time until they figure it out.