'Brexit': The tech case for and against

The director of technology at UK think tank Parliament Street presents the case to leave the EU. The deputy CEO of techUK explains why the tech community wants to stay.

This weekend the UK press has been full of analysis, opinion and views on whether the UK should leave Europe, with the referendum date now set for 23rd June. The process has seen a lot of back and forth from all sides with various political figures surprising people with their stance.

But how does the tech community feel? Well, when Dan Swinhoe crowdsourced opinion from UK IT professionals the results were skewed in favour of staying – with eight out of nine explaining why this was their view.

To provide a bit more depth we have listed longer perspective from Steven George-Hilley, Director of Technology at right of centre UK think tank Parliament Street, on why Britain should leave. And Antony Walker, Deputy CEO of techUK, on why the UK tech benefits from EU membership but that more reforms are needed.


Why leaving the EU is best for Britain’s tech industry

By Steven George-Hilley Director of Technology at UK think tank Parliament Street

Britain’s tech sector is one of our country’s greatest success stories. Thanks to the hard work, determination and dedication of our entrepreneurs, eight tech companies have now passed the $1bn valuation mark in the last 12 months alone.

Our app pioneers, fintech gurus, digital wizards and software innovators are re-defining London and Britain as a hive of tech expertise. These companies are also opening new job opportunities in the creative industries for the next generation of school leavers offering apprenticeships and routes to lucrative careers in Tech City.

But many of Britain’s upcoming tech-success stories are small to medium-sized enterprises (SMEs) which are hampered by regulation and red tape. This administrative burden comes from a complex regulatory framework, created and enforced by the European Union (EU).

The mountains of paperwork have a real impact on our entrepreneurs. EU regulations are estimated to have cost UK businesses at least £33.3bn in 2014, making it harder to hire and operate in an increasingly complex world.

Furthermore, polling by Perspective Research Services in August 2015 [PDF] found that, by 2:1, SME leaders think the EU is a hindrance rather than a help to their business. More than 70% of SMEs want the British Government rather than the EU in charge of employment law, health and safety, and trade negotiations.

So whilst the “In Campaign” (also known as Project Fear) continues to peddle the myth that Britain cannot survive without the European Union, let me paint a picture of a country standing on its own two feet and opening up to the global digital marketplace.

Being trapped in the EU severely hinders our ability to trade with emerging markets meaning we are missing out on partnerships and collaboration with exciting new tech companies. Quitting the EU would enable us to build stronger trade relationships with India, UAE and China and allow us to build a truly global and diverse industry.

If Britain became independent once again, then we could also capitalise our much neglected Commonwealth ties to have free trade deals with the likes of Australia and all Commonwealth countries the EU has ignored or overlooked.

Our country is currently burdened by an eye-watering £12bn a year EU budget, just imagine how some of that hard-earned cash could be reallocated for supporting new companies and offering grants to those looking to start a tech business. We could also use this extra money to fund training in schools to encourage more young people to study science, mathematics and engineering at A-level to provide our future tech companies with home-grown talent.

Technology can also play a critical role in closing the digital divide by shifting public services online and offering parts of the country high standards of connectivity, to open up employment opportunities for the disadvantaged.

Yet £12billion of our money is wasted on subsidising limousines and luxury MEP lifestyles, paper-pushing admin jobs and failed EU schemes and initiatives. Our current financial commitment is not only unfair and unaffordable, it is unstainable in the long term.  

Technology trends such as the Internet of Things and Big Data are creating a more connected, collaborative world. Yet the clumsy EU science funding process is not developing the networks between universities, scientists, technologists, entrepreneurs, and financial support properly. This model has been critical to tech development America and yet is poorly managed by the bloated EU.

So as we approach the referendum, David Cameron and an army of high profile celebrities and government-friendly business folk will continue to spread fear about the prospect of Britain breaking free of the European Union.

Yet this desperate strategy will only drive more supporters to the Vote Leave ‘Brexit’ campaign.

Our country has built a thriving technology industry in the face of strong opposition, scepticism and limited funding. If we can overcome this challenge then we can gain the courage to set Britain free from this bloated EU superstructure that strangles innovation and makes it harder to build a business.

Let’s ensure our tech industry is ahead of the game by breaking free and building our trade links with exciting new emerging markets. Let’s harness our entrepreneurial spirit and once again defy the doubters who said we couldn’t survive unless we are shackled to the EU.

Britain has so much to offer the world in terms of science and technology but so far the EU is hindering rather than helping this journey. It’s time to recognise that our future lies in the connected global marketplace and to realise that if we want a thriving technology industry fit for the future, ‘Brexit’ is best.


Why staying in the EU is best for Britain’s tech industry

By Antony Walker, deputy CEO of techUK

In July 2015, we surveyed our members on a range of topics, including their views on Europe. What was clear last summer was the overwhelming confidence about the UK tech industry. 94% were positive about the sector’s potential for growth over the next two years. The biggest driver for optimism was a customer base across the public and private sector focused on innovation (89%) which drives the market for their products and services.

When asked about their view on an EU referendum the large majority of techUK members (71%) said that ‘staying in with reform’ would be the most beneficial option for the UK. A further 17% supported continued EU membership in its current form, whilst only 9% of respondents thought a decision to leave the EU would be beneficial for the UK. Perhaps surprisingly, views were relatively consistent when broken down by company size.

The main reason for this strong support for staying in a reformed EU was the importance of Europe to our sector. It’s an important market for the majority of our members and becomes more important for tech companies as they grow. The majority of techUK members (75%) have customers and suppliers across the EU, which means they would still have to comply with many EU rules even if the UK left the EU.

Crucially for the current debate, a majority believe that key EU policies on trade and investment have a positive impact on their business (63% net positive). Those with EU-based customers and suppliers are significantly more likely to be positive about these policies (78% and 87%). Only 2% said the broad impact of the EU policies related to investing and doing business across Europe was negative and just 1% thought that the impact of the EU on their ability trade outside of the EU was negative.

It’s important we understand why our members are so positive about the UK’s membership of the EU, and why they are concerned about the implications of leaving. Uncertainty in any form is bad for business and there was a strong view that the consequences of a potential EU exit are unclear, with just one in ten (10%) saying the practicalities of leaving the EU are well understood.

Given the importance of Europe to our members, particularly to their growth, it’s vital that the UK has influence over the issues that affect businesses. Nearly four in five (78%) believe that a choice to leave the EU would reduce the UK’s influence on the issues that have a direct impact on their businesses.

Most tellingly, 65% of companies with customers in the EU and 76% of companies with suppliers in other EU Members States are concerned about their ability to buy and sell services across the EU if UK left. At such a crucial time in our economic recovery, this concern must be taken into account by politicians and voters.

The next few months could have a huge impact on the future of the UK and UK businesses. Our survey showed that only 2% thought that a decision to stay in the EU would be a threat to their growth. A clear sign that although the EU isn't perfect, remaining a member of a reformed EU would be preferable to the alternative. We will be surveying our members again now the Referendum date has been confirmed to understand if their views have changed, and what impact the Prime Minister's negotiations have had on how their views on EU membership.


Further reading:

UK IT pros have their say on the prospect of a ‘Brexit’