brexit-2
Business Management

'Brexit': techUK members definitely want to stay in Europe

This is a contributed piece by Julian David, CEO of techUK

 

Last week, we published the views of our members on the UK’s membership of the EU referendum. Based on the responses of 277 companies, 75% of which were SMEs, it’s clear that the techUK membership sees the EU as good for the industry and good for their businesses.

This is in the context of an industry that is growing and creating jobs faster than the rest of the UK economy, and is overwhelmingly positive (93%) about the potential for growth in the next two years. It’s interesting to note that confidence has not fallen since our previous survey, conducted nine months ago, despite the changes in the global economy. The sector is in robust health.

It’s no surprise that Europe is an important market for UK tech. By its very nature, it’s a sector that is less confined by national boundaries than traditional industries, and the majority of our respondents have customers (70%) and suppliers (59%) across the EU.

What might be more surprising is how positive the sector is about the impact of the EU. A majority of all respondents, regardless of their view on the referendum, believe EU policies have a positive impact on their ability to buy and sell (69%) and trade and invest (64%) in the EU. We often hear about the burden of EU regulation, but this was not reflected in our survey - only 3% of all respondents said these policies had a negative impact on their business.

This will be a relief to many, given that the majority said they will have to continue to comply with EU rules, even if the UK votes to leave the EU in June. 76% have customers and suppliers, 66% sell products and services and 63% have operations in the EU – all of which would have to comply with EU rules, regardless of whether the UK is a member or not.

Tech is a UK success story. The global nature and fast growth of the sector means that Europe is critical to the majority of our members’ supply chains. As a result, a decision to leave is causing increasing concern. 65% of all respondents said a decision to leave would be a cause of significant uncertainty for their businesses, up from 54% nine months ago. We expect that concern to continue to increase as the decision approaches.

Although we’re getting closer to the referendum, and the debate is increasingly dominating the political agenda, there is still a strong view that the consequences of a potential EU exit are unclear. Less than one in ten (9%) said the practicalities of leaving the EU are well understood – down 1% compared to the 2015 survey.

This means businesses cannot make any preparations for a potential exit. Indeed, only 1% of respondents said they had made detailed scenario planning, while 62% reported they have made no preparations at all.

Uncertainty is bad for business – it prevents businesses being able to look ahead, which in turn impacts investment. The tech sector accounted for 10% of UK GDP in 2015, and grew 32% faster than the national average between 2010 and 2014. We want to see that continue to grow in 2016 and beyond, but that requires a supportive environment for this vibrant sector. Our members are clear that the right place for UK tech is in Europe.

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