The UK tech and digital sectors have been world leaders for the last few decades, and were some of the strongest advocates of the UK remaining in the EU during last year’s referendum campaign, so there is understandable nervousness in those sectors about their post-Brexit future. The tech sector gets that in the digital world borders no longer exist and when artificially imposed stymie growth opportunities, so they are naturally concerned that the UK remains an open place for business. Free-flowing cross-border data under legal agreements and being a welcoming destination to high-skilled foreign talent are key to that openness. Those are both possible post-Brexit, and more than possible, they are essential to our future prosperity, you cannot do business in the 21st century without secure legal agreements on cross-border data flows, but such an agreement is in every party’s interest to strike. Similarly, the UK government has been clear throughout the Brexit process that the UK will remain an open destination for high-skilled talent needed to meet economic demands. When it is clear those two future building blocks will stay in place the UK begins to look like an extremely attractive destination for the tech industry.
A lot of the pro-remain arguments centred on the risks of Brexit, of which there are many in some sectors, but in the digital economy it can be argued much of the chance was in staying within an increasingly anti-tech regulatory environment. Over the last two years the European Commission has been unrolling its long heralded Digital Single Market proposals, a package of measures designed to update EU laws for the internet age. They have been sold as great positives for the digital economy, but almost without exception every single part of the package has created deep unease amongst tech companies. The proposals seems to be trying to roll the clock back and end the disruption new internet businesses have created for traditional analogue market players. ‘Create a level playing-field’ is an oft-used term, but in fact what the Commission is doing is refusing to recognise the pitch has changed forever, and that’s not a bad thing, industries should be continually evolving and meeting demand in more efficient ways.
There is a very real risk of the EU becoming a digital backwater, this may protect some jobs in old industries, but will lead to a great many more jobs just not being created, or being established outside the EU, for digital knows no borders. In this situation the UK is ideally placed to act as a bridge between the EU and the US and the rest of the global economy. We are already the best place to raise capital, and set up shop in the EU, and with an even more pro-innovation regulatory environment post-Brexit we can strengthen our position further. A lot has been made of the threats to the City of London from leaving the single market, and there are undoubtedly some risks, but London has been a global financial centre since long before the single market started and has many attractions outside of single market membership. Our common law system, our existing flexible employment regulations and sensible taxation laws, our use of English, are all reasons London will still flourish. Its capital raising powers will continue to draw people in rather than see them seep away.
The UK is a much more digital-friendly society in almost every walk of life, feeding into the wider tech sector, take e-commerce, in 2016 the UK had the highest proportion of e-shoppers in the EU28, 83% had bought something online in the preceding 12 months, compared to just 17% in Bulgaria, or 44% in Spain, in Belgium the figure was only slightly better at 57%. We also have some of the highest statistics for trust and comfort in online services and willingness to purchase cross-border, e-trade with the United States is already significantly higher than other EU countries. Deepening trade links with other more advanced digital economies after Brexit offers the UK enormous opportunities to expand further the most rapidly growing sectors of our economy, replacing any jobs lost by a lessening of single market access in other industries. We do not really need to advertise our tech-friendliness to the rest of the EU, but we should be welcoming European start-ups with open arms to the UK – and not just to London. In the West Midlands significant tech hubs exist in Birmingham and around Leamington Spa, which recently launched a digital growth strategy paper aimed at enticing further tech players to the area. With such proactive approaches, tech offers a real chance to rebalance our economy outside the capital and replace lost industrial jobs in the regions of Britain, for many digital services there is simply no need to locate in London or other major cities.
Government can make a big difference here, clearly. TechUK, an alliance of leading digital innovators in the UK, has just published its manifesto for what it would like to see government do after the election. Getting Brexit and future trading relations right for Tech is their first priority: “maintaining the cross-border data flows; making the UK a hub for global tech talent; providing confidence, stability and certainty throughout the negotiations; and placing tech at the heart of Global Britain’s new trade relationships”. Their other 4 priorities all touch on themes the government has already discussed or taken action on, but there is more to do: “economic renewal through a modern Industrial Strategy”, “building a smarter state”, “nurturing the skills for the jobs of the future” and “guaranteeing a safe and secure digital world”.
To take them in turn, the government has already prioritised digital as part of its new industrial strategy, this is a long-term investment, but it requires the right kind of R&D being boosted, creating the right conditions for investment in digital and data infrastructure with an open and dynamic regulatory framework. We can also use tech to help improve some of our long-term systemic economic problems, not only in terms of regional divides, but as part of the solution to improving our historically low productivity.
This is not just about the private sector of course, governments everywhere since the Millennium have begun to understand the importance of leading by example on tech, and the ways in which a digital state can deliver better public services at lower prices. States such as Estonia are showing the way forward in terms digital transformation of government and services, and since 2010 the UK government has also made great progress here. A smarter state will trickle down benefits throughout the economy and society.
The great growth of tech in the UK over the last decade has created a shortfall in skills, demand for tech jobs far outstrips supply. The government has already prioritised equipping the next generation with the right digital skills for the jobs of the present and future. That starts at school, but carries on with ambitious new apprenticeship programmes, not dissimilar to those which allowed our old industrial sectors to thrive. A great tech economy starts with a great workforce.
As the recent cyber attack on the NHS reminded us, cyber security is critical to our future safety and prosperity, in the UK we do have strong cyber security, but we will need to continue our substantial investment programmes in public sector cyber security, as well was as helping the private sector, particularly SMEs, invest in cyber security. A safe tech environment is vital to attracting new investment from within and outside the UK.
So, the future of the UK-wide tech economy is bright, and despite some of the current uncertainties around Brexit in the long run it can actually give Britain the chance to be the only real pro-tech economy in Europe. To achieve that goal will require collaboration between government and the tech sector to mould a flexible and future-proof regulatory system, and smart investment from government in the right infrastructure and skills development, as well as continuing to have a deep and special partnership with the EU27 to allow talent, data, and e-trade to flow freely across the channel.