How Will Brexit Effect UK Tech Companies?
Prior to the Brexit vote, the UK's tech companies were virtually universally in favour of remaining within the EU. But now the vote has gone the other way, attention is turning to the effect it will have on businesses and what changes they may face in the near and long term future post-Brexit.
Getting access to talent
When asked before the vote why they wanted to stay within the EU, one of the top reasons that companies cited was access to the right talent. The current freedom of movement situation that the UK experiences as part of the EU is one area that looks set to change but is that chance as dramatic as it may first seem?
For starters, while we will leave the EU, it seems likely we will remain within the EEA – the European Economic Area. This means that bringing people to work in the UK will continue to be possible. Added to that is the fact that the EU isn't the only place tech companies go to import talent from abroad. The current 'Exceptional Talent' visa was created with the tech sector in mind and looks set to remain a part of the UK's laws.
And ask many tech companies where their overseas talent comes from, few will answer that it comes from the EU. The majority of them come from Asian countries such as China, Japan and South Korea as well as from the USA. This shouldn't change post-Brexit.
The economic situation
Already we are seeing the direct economic results of the Brexit decision with the fall of the pound against other currencies. Share prices have dropped and tech companies have felt this, although not as badly as banks. However, most people think that this dramatic drop will level out and while they may not go back to what they were before, things will move in an upward direction.
Another element to the economic situation is the threat that the big companies might relocate, with Dublin being a top solution offered. English speaking, already home to companies such as Facebook, the Irish capital is advertising itself as an alternative to London with its Silicon Docks area and the neighbourhood already nicknamed Googletown. The government of Ireland even laid out a plan to spend around 2 million euros to attract new companies, though their focus is on central and southern Europe at the moment.
However, the UK leaving the EU could actually effect Ireland's position on some key areas that could make the proposition not quite as rosy. For example, their efforts to keep the 12.5% tax rate will lose its biggest backer in the EU. And the Irish government's tough approach to big companies' tax payments may put some off making the switch.
Funding sources
Before the vote, there was a great deal of talk about deals falling through, funding sources drying up and a general stagnation in the country. But a week on from the vote and the majority of deals seem to have continued as if the vote hadn't happened. In fact, many of the big London venture capital companies have been quick to state that it is business as usual for them and their high reserves mean that there will be little change to their activities.
Start-up companies may be the most concerned, thinking their opportunities have dried up but again, this hasn't proven true. Due to the international nature of the tech world, there are always plenty of opportunities and only a fraction of these come from the EU. Therefore, both funding and opportunities appear to be continuing as before and the strong thread of entrepreneurism in the UK means this isn't likely to change, even after Brexit.
