The uncertainty surrounding Brexit is causing concern for businesses in all sectors, including technology. In fact, a survey by the Institute of Directors found that nearly four out of ten IT firms might relocate their operations overseas due to Brexit.
Despite this, the UK's tech sector continues to experience record growth. Research from industry body Tech Nation shows that the industry will have raised $11 billion (8.8 billion) of investment by the end of 2019, compared to $8.7 billion (7 billion) the previous year. What's more, an estimated $1 billion (802 million) of foreign and domestic investment is raised per month. Will this trend continue post-Brexit?
From threats to opportunities
Although the details of Britain's departure from the EU are still unclear, it will no doubt have a significant impact on the business landscape whatever form it takes. Karl Foster, legal director at Blake Morgan, believes that Brexit will present both opportunities and threats to foreign investment in the UK regardless of whether a deal is reached. He says: "Firstly, currency fluctuation resulting from a no deal Brexit may make UK targets more attractive to foreign investors as assets will be proportionately cheaper when priced in stronger currencies.
"Likewise, much of the basis for investing in the UK will still apply; the English language, established regulatory and industry eco systems, leading academic institutions, an effective capital market system, a traditionally business friendly approach, and longstanding international outlook will remain. It's perhaps for these reasons investment in tech startups is hitting record levels despite Brexit uncertainty."
But he says the impact upon businesses that rely on cross border data flows with EU members is more uncertain. "The GDPR would be replaced with a UK version which would largely replicate the provisions of the GDPR. However, as the UK would be outside the EEA, it remains to be seen how the practical implications will be handled."
While the exact effects of Brexit aren't known, Foster takes the view that the threats may become opportunities for tech companies and could help to boost investment. He adds: "Much has been made of the potential shortage of EU workers in the picking of fruit and vegetables. Investment in robots could address these issues and potentially help address productivity issues generally. Blockchain technology has long been mooted as the next big thing in international trade to bring greater efficiencies to the supply chain. Perhaps a government endorsed strategy lead to widespread adoption."
Remaining optimistic
For many, there's a strong belief that UK-based technology companies will continue to flourish outside the EU. Gareth Jones, co-founder of coworking organisation Town Square Spaces, says decades of economic stability won't be eroded overnight post-Brexit. He tells IT Pro: "The UK remains an attractive place for investors historically, corruption has been low, there are world-class universities in every corner of the nation, excellent quality of life and there's connectivity to all major markets."
He urges business owners to remain optimistic, despite operating in uncertain times. Jones adds: "It is important that tech founders focus on how attractive the UK tech sector is, and will remain to be, and contribute to the discussion on how they would like it to be in the future. The divisive nature of the debate is a quagmire of opinion and speculation, and founders need to remember they have control over one thing their business and its planned direction."
Kieran Abbott, founder of software development agency Big Lemon, notes how the industry has grown exponentially over the past decade. He believes this trend won't automatically stop because of Brexit. Abbott says: "The latest tech nation report supports the recently published ONS figures, which suggested that the number of tech-related jobs in the UK has risen by 38% since 2010.
"In Wales, this figure was as high as 83%, with the south-west of England boasting 41%, suggesting that other areas of the country are beginning to catch up with London and The City. This should pique the interest of potential investors as it shows there are untapped regions that could provide some exciting growth in the sector."
Businesses are also receiving lots of support in the run up to Brexit. Abbott explains: "From our personal experience, there has definitely been a lot more support for tech startups in Wales, and this has resulted in the increasing number of fast-growing tech-businesses. However, we've found many of our customers are getting support from independent organisations, rather than the government.
"Banks have realised that if they support more tech startups, then they can generate enough new customers to make accelerator programmes worthwhile. The fact that private enterprise is recognising the opportunity is encouraging, and suggests that the UK will still be an attractive place for investment post-Brexit as the tech sector in regions away from London continue to mature."
Success stories
Having recently secured a 2 billion investment deal from two private equity companies, enterprise software company Advanced is something of a British success story. The firm's CEO, Gordon Wilson, envisages Brexit having little impact on his business. Advanced is pushing ahead with accelerated growth plans in the meantime and has completed a transformation drive to ensure it's prepared for the UK's departure from the EU.
He explains: "Currently, in pre-Brexit state, the outcome and implications of current negotiations and the resulting political and economic landscape remain unclear. Advanced over the last three years has undergone a huge transformation to ensure we run as an agile, efficient business, able to respond quickly to the dynamically changing technology landscape, markets we serve and the wider political and economic climate."
Wilson claims that because Advanced remains heavily invested in the UK and is a software business, the impact of Brexit will likely be small. He continues: "95% of Advanced business is transacted in the UK [sterling to sterling] and so we cannot imagine being impacted by currency dynamics.
Like many UK tech businesses, Advances is a software provider, which means it will also be unaffected by one of the key areas of concern in a no-deal scenario: Import/export tariffs and changes in supply chain logistics.
"[We] expect zero impact on the availability of the software products and services we provide. Similarly we cannot imagine any impact on the costs of such. Our current position therefore is that we currently envisage Brexit will have a negligible impact on our business," Wilson concludes.
At the moment, it's unclear how Brexit will pan out. Whether or not the UK leaves the EU with a deal is unknown. However, what's clear is that regardless of legitimate concerns, plenty of British technology companies and founders remain optimistic about the outcome of Brexit and the potential opportunities it may bring.
