“It was the best of times, it was the worst of times,” wrote Charles Dickens in the opening of his 19th-century novel, “A Tale of Two Cities.” How appropriate it is today and to the conflicting reactions to the U.K.’s referendum to exit — or Brexit — the European Union. While it’s most likely that the United Kingdom will not officially leave until 2018, the turmoil was immediate. Of particular interest is the potential impact on regulation and investment in the U.K. technology sector.
London is (was?) not only the financial capital of the EU but has also enjoyed being a highly desirable hub for tech startups, too.
According to the BBC, in 2016, the “Tech City cluster of businesses reported that 1.56 million people were employed in digital companies in the U.K., with 328,000 of those in London.” And more than half of European financial tech “unicorns” — valued at $1 billion-plus — are based in the UK.
Because of the potential for tighter regulations that the Brexit vote would bring, the tech sector’s stance was to remain. (A notable exception as noted by USA Today and others is that of vacuum and drier “king” James Dyson, who asserted being separate from the EU meant he would be able to “create more wealth and more jobs.”)
With regard to regulation, the United Kingdom could no longer be included in data-sharing agreements that arose following Safe Harbor’s demise. Instead, per Fortune, it will have to reform its privacy laws and ensure they are in keeping with the EU’s new rules. If not, it will “face big barriers to cross-border data flows.”
In a Skype interview between Recode and James Waterworth, the Europe VP of the tech industry trade group Computer and Communications Industry Association (CCIA), Waterworth stated that “it’s possible the courts would come to the same conclusion as they did with the U.S.,” and nix any future U.K-EU user data deal.
Besides regulation, another effect is investments. Opponents of Brexit warned that investors would be more hesitant to consider U.K. startups. On cue, Berlin-based startups are cautiously pleased with the outcome of the referendum. Per Fortune, the Berlin-based venture capital provider German Startups Group announced, “Brexit is good news for the German startup scene.” The adage “One man’s loss is another man’s gain” comes to mind.
What’s your opinion of Brexit’s short- and long-term effects on the technology sector in the United Kingdom? We welcome your viewpoints and intend to keep you informed.