Home Brexit What Brexit could mean for the British tech sector

What Brexit could mean for the British tech sector

30th Apr 19 11:58 am

The Technology sector has been one of the shining lights of the British economy. It has produced more than sixty ‘unicorns’, a privately held start-up whose valuation exceeds the $1bn mark, attracting more than £6.3bn in venture capital investment in 2018, outperforming the rest of Europe.

The UK’s membership of the European Union has played a major part in this success. It has cultivated a reputation as a technological epicentre, allowing it to attract top talent from the rest of the Europe, with the Tech Nation Talent report revealing that the digital tech sector has a higher proportion of non-UK nationalities working in it than the wider economy.

Thus, with the success of tech being so closely aligned to the UK’s links with Europe, surely Brexit represents a threat to its future prosperity. But how might it be affected? And what can be put in place to ensure its future?


The UK has long been an attractive destination for workers. It isn’t hard to figure out why too. The UK plays host to a number of the world’s largest tech companies, a lively and pioneering start-up scene and an incredibly cosmopolitan populace. Furthermore, due to freedom of movement rules, which make it as easy to hire a worker from Riga as one from Rotherhithe, it was simple for a continental expat to find a job and move to the UK.

Brexit is extremely likely to lead to a change in immigration law. At best, this will make it more difficult for companies to hire foreign workers. At worst, it will outrightly prevent them from doing so. The ultimate effect of this will be to stifle the growth of the sector. The UK doesn’t produce enough STEM workers to satisfy demand, and this necessitates a continental recruitment strategy. With Brexit reducing the tech sector’s ability to hire, and the education system not creating enough domestic talent to compensate, firms will have to relocate and reduce the scope of their plans.

Research and Development

The EU has been an excellent vehicle for the funding of science and technology. Grants are generally allocated at the federal level, and the UK has been a disproportionately large beneficiary. Between 2007 and 2013, the UK contributed €5.4bn to the section of the EU budget allocated to research and development initiatives, yet it received back almost €8.8bn, making it the second largest recipient of competitively awarded funding across the same time period. The EU has also been a brilliant vehicle for the collaborative research, with initiatives like the European Research Area helping to connect groups across national borders.

As a caveat, it should be noted that the Government has agreed to underwrite funding for competitively bid EU projects submitted before Brexit day. Furthermore, UK researchers and businesses will still be eligible to apply for EU funding as third country participants.

However, this only covers projects already in existence, and at the time of writing, it is unknown if there will be a replacement pool of grants. While it remains highly likely that the Government will seek to develop one of its own. With the hundreds of potential Brexit impacts that the Government must consider, it is unlikely that the funding of the sciences will be given top priority. With the most recent data showing that the UK’s spend on R&D as a proportion of GDP ranked it eleventh in Europe, this statement seems to be especially true.

Some UK businesses may also assume that the grant judging panel will not view British initiatives favourably, and may no longer choose to go through the time intensive application process.

The consequence of this will be to reduce the amount of funding available to the scientific community. This will have a direct impact on how programs are undertaken, but it may also make it more difficult to attract foreign workers, who could be attracted by the financial incentives on offer elsewhere.

Where do we go from here?

The Brexit process has been fraught with ambiguity and confusion, a fact which hasn’t escaped those working in science and technology. The sector has been one of the shining lights of the British economy and can continue to be so in the future. However, to do so it needs clarity from the Government. Providing assurances over funding, immigration and our future economic partnership with Europe will help to avail the fears of many.

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