The Brexit divide in the UK’s tech industry

Nicole Kobie December 17, 2018

No-one knows what’s going to happen with Brexit — least of all the politicians running the negotiations — making it difficult to make predictions about what it will mean when/if the UK leaves the European Union. What we can say for certain is this: even tech is divided by Brexit.

The Brexit divide in the UK's tech industry

In November, Prime Minister Theresa May revealed her draft withdrawal agreement, 585 pages detailing what Brexit will mean, if she can get anyone to agree to her deal. If that happens, and if the agreement stays unchanged, it contains a few bits and pieces about and for the technology industry.

The biggest piece is around data flows, in particular how data will be able to move in and out of the European Union. Under GDPR, non-European countries that want to process EU citizens data must be designated as “third states” with adequate privacy and data protection regulations. The UK is likely to qualify for that, given we’re currently under GDPR; that could change in the longer term as our laws diverge from the EU’s rules.

Other areas of the draft agreement that affect the technology industry include details about accessing the EU’s own internal IT systems — if the UK uses any European databases, and it does, it’ll have to pay for the privilege — but the draft was light on what Brexit could mean for R&D and science, in particular EU funded research. That’s about it, though of course immigration, customs and the rest will have a huge impact on the local IT industry.

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It’s no surprise then that so many in British tech aren’t happy about the looming spectre of Brexit — though that wasn’t obvious to industry body TechUK, which claims to “represent the tech industry in the UK.” At the time, CEO Julian David said in a blog post that his organisation backed May’s withdrawal agreement, arguing that though it was imperfect, crashing out of the EU without a deal would be even worse.

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“The proposed agreement would avoid the very dangerous consequences of no deal and provides a basis on which to secure a comprehensive deal on the UK’s future relationship during the implementation period,” he wrote. “techUK particularly welcomes the clear statement of intent to secure the free flow of personal data between the UK and the EU. This issue is critical to the tech sector and to every other industry in a modern digitising economy.” He noted that more work was needed to secure market access for digital and telecoms services.

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David’s argument wasn’t seen as innocuous industry support for a “better than nothing” deal, but as a betrayal, sparking a noisy backlash on Twitter. The more polite disagreement called techUK “misguided” and asked for it to retract the claim that it was representing the industry’s views on the withdrawal agreement. David was forced to further explain his viewpoint in a followup post, admitting his organisation doesn’t represent everybody in tech, but claiming to have a “broad base”. He said techUK’s choice to back the agreement was informed by committees, a Brexit policy group, and a survey before the referendum.

“Clearly, the Referendum did not go the way techUK member companies hoped, however, at no time since the Referendum have our members called for us to campaign for a new vote,” he wrote. “Instead, their direction was to respect the fact of the referendum and work within the political process to ensure that the agreements negotiated with the remaining members of the EU support their ability to invest in the UK and continue to trade successfully.” He stressed that techUK didn’t back Brexit, but thought a no-deal Brexit was “a potential catastrophe”, hence the support for May’s withdrawal agreement.

Alongside kickstarting a Tweet storm and David’s explanation, the furore also inspired a new UK tech organisation, dubbed “Tech for UK“, backed by local tech heavyweights Martha Lane Fox, Jimmy Wales and Mike Butcher, among several hundred others.

Rather than back the withdrawal agreement, Tech For UK instead argues for a new referendum, or People’s Vote. “It is our view that the government’s ‘Withdrawal Agreement and Political Agreement on leaving the European Union’ will not serve the best interests of the UK tech industry,” the group argues in an open letter to May. “It will vastly increase friction in trade with the EU and impose significant and costly changes for the tech industry. We therefore believe that Members of Parliament should NOT support the agreement in the ‘meaningful vote’ and should instead vote for a new referendum, a ‘People’s Vote’, on Brexit, with the option to Remain in the EU.”

The letter argues that the UK tech industry is worth nearly £184 million to the UK economy, and not only highly export led, but more diverse than is perhaps realised, with more minority workers than other UK industries and one in five workers from the EU. “With Brexit, we foresee greater problems to hiring talent (risking, over time, a UK brain drain), as well as the ‘founders of the future’ simply not arriving in the first place,” the letter says.

The risk goes beyond hiring. “The loss of access to European funds, the loss of EU funding into breakthrough innovation such as Horizon2020, the flight of talent which powers UK tech companies due to the uncertainty around immigration, all of these factors are adversely affecting the UK Tech industry,” the letter notes.

Regardless of how you think Brexit, whether no deal or guided by the withdrawal agreement, will affect the UK and its tech industry, one thing is clear: people working in digital, IT, and other areas of tech are in as much disagreement as the rest of the country. That said, at least it’ll be clear which tech industry organisation’s Christmas party you should be going to if you want to avoid arguments on the subject of Brexit.