Know the Effect of Brexit on Technology


The Britain’s backing off from E.U., a move more commonly known as Brexit, is going to take a while (about two years estimate) for now. The exact nature of the impact of Brexit, will emerge over a longer period of two years or more, it’s being said. But this global decision does have global impacts. Some are optimistic that, with fewer E.U. regulations, British companies would thrive. But the uncertainty in the immediate aftermath of the vote makes some uneasy. Here are some major issues facing the tech industry in Britain and abroad, in light of the decision. There are questions lingering around and over. Are you worried about your stakes? Then just read on!




One of the foremost reasons why many tech firms were against the Brexit was that it would be difficult for them to secure funding for startups.

Britain benefits in large part from funds such as the European Investment Fund, which backs an estimated 41 percent of venture capital investments in Europe. Its majority investor is the European Investment Bank.

Although EIF, for now, has confirmed to continue the business like it always did but the uncertainties do remain. The industries are worried that the tax environment will not be as favorable as it has been.

Talent and Immigration


British removal from the E.U. will impact the allowances the organization used to shed out to let workers move freely between countries. There can be a shortage of qualified workers in the country.  This although might get ironed out in a later agreement.

There are also worries that companies that looked to London as an ideal place to start a company will now look elsewhere. Some start-ups have already begun to evaluate whether London is still the right place for their offices.

Workers from EU member states are a significant presence on the staffs of UK tech startups. That’s because, according to at least one UK CEO, there just aren’t enough UK graduates with the math and science chops to fill positions in development and engineering. Leaving the EU adds new (or perhaps, old) barriers to immigration and recruiting, which would be particularly onerous for small companies.

Data Flow and Data Privacy


  • The EU has been pursuing what it calls a Digital Single Market, intended to create uniform rules for everything from e-commerce to digital streaming and user privacy. The UK has essentially opted out of that project now. That may be good for tech companies in a limited sense—the UK, in general, has a more relaxed attitude to data privacy, while Europe has thrown up repeated barriers to the operation of companies like Google.
  • But in the bigger picture, Brexit could be bad even if the U.K. ends up with more tech-friendly rules. Perhaps the most magical word in tech is “scalability.” Offering the same product or service across many markets keeps marginal costs low and profits high. Brexit, by fragmenting the market, is almost certain to throttle digital scalability and, thus, profits.
  • Currently, U.S. and E.U. are having their talks over the free flow of data between the both. Brexit is likely to curb the free flow of data and the privacy concerns attached along with. With U.K. backing out from E.U., there certainly are questions raised over the data flow.
  • However, despite the referendum outcome, things in this area will remain with the status quo for now.

Experts say that if Britain shy away from the data flow agreement, it may have to face some negative consequences.

New trade tariffs


Once the UK has left Europe and until a new deal is struck, the UK would trade with the EU under World Trade Organization rules. These rules would see UK exporters paying new EU import tariffs, as well as facing other fresh barriers to trade. The UK would also have to renegotiate the more than 50 free trade deals the EU has with countries ranging from Canada to South Korea.

However, the impact on UK-based tech firms will obviously be dependent on which regions of the world they do business with.

The Positive Side of the coin

It could also mean that the tech companies face easier regulations in the UK. Two examples are lesser taxes, and easier rules on privacy report the Wall Street Journal.

The positive side is that a Brexit would allow UK companies to renegotiate international contracts, and free up home brewn technology from being compliant with at times expensive EU regulations.

Talking about the Big players

In Britain, a majority of tech firms were against leaving the E.U. A technology industry group survey found that 87 percent of British technology firms wanted to stay in the European Union and that 70 percent of them worried a vote to leave would damage London’s reputation as a technology hub. Global companies with offices in Britain, such as Microsoft, have also campaigned against the move.

Microsoft is one of the few major tech companies to take a side, and has urged for the UK to remain a part of EU in an open letter, “We appreciate and respect that there are a range of reasons that motivate people on both sides of the debate, but as a business that is very committed to this country, our view is that the UK should remain in the EU”.

Now the votes are out, let’s hope for the best! Fingers crossed!


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