The Effect of Brexit on the Tech Industry

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The moment companies realized that Brexit has become inevitable the wheels were set in motion for big changes. Industries are differently impacted by the changes brought about by the UK’s decision to leave the European Union. The tech industry relies heavily on the free exchanges between the two economic blocs, but also the human resource provided by the countries from the old continent. Not surprisingly, they were the first to take preemptive actions and prepare for both the best and worst case scenarios.


High hopes for a transitional arrangement


Companies big and small are hoping that the EU and UK will reach a convenient agreement before the official break occurs. The institutions involved are making small steps into the right direction, but some businesses are worried that progress doesn’t happen fast enough. Recent studies highlight the fact that the number of start-ups activating Brexit contingency plans is on the rise and many already have a plan in place. Even in those cases where decisions were not yet reached, discussions took place at board level.

Some startups went a step further and have assembled teams in charge with monitoring the progress made on the Brexit transitional arrangement. Only a small minority chose not to take any action and these are mostly fledgling businesses who don’t have the resources to deal with the potential problems. Larger firms have the means to address these problems, but at the same time they face greater challenges. UK-based ventures need a coherent strategy when dealing with their EU partners after the split occurs.


Silicon Valley investments surge to new highs


Amid all the Brexit concerns, there are also some good news for the tech industry, as foreign investment grows. British companies are taking advantage of an influx of investments from Silicon Valley firms who spend more money here than ever before. In 2017, the psychological threshold of £1 billion was crossed and there’s no reason to expect an imminent slowdown in this regard. Software companies are the main beneficiaries of these investments, as they attract most of the money spent by Silicon Valley firms.

While investments have peaked in 2017, this spike is still a part of a larger trend that started almost a decade ago. Companies who have their headquarters in London, Cambridge and Oxford attracted the vast majority of the investments, a massive 79%. US firms seem undeterred by the prospect of Brexit and continue to regard the UK tech industry as a solid asset. The high potential of British companies and their track record eventually outshined the concerns caused by the potentially negative effects of Brexit.


Good news for Irish companies


In Ireland, the tech industry is also on the rise and local companies are likely to take advantage of the changes caused by Brexit. They already capitalize on the fact that they reside in an English-speaking country, with EU membership and a business friendly environment. Ireland could benefit even further from Brexit, providing a safe haven for risk-averse companies who dread the prospect of being dragged in bureaucratic troubles.

The same Silicon Valley investors that spend a lot of money on the UK tech industry are now considering companies from Ireland. Some went a step further and found it worthwhile to move their headquarters here or at least open more offices. The country can only hope that these positive effects will be enough to outshine the downsides of deteriorating trade perspectives. Attracting foreign investment is a top priority for Ireland and for the time being, things are looking up. Dublin is the most attractive Irish city, but foreign companies also consider Cork, Limerick and Galway when building hubs.

Ireland also regarded as an exciting destination for European immigrants, especially brainy young people. The prospect of working for Google and other tech giants has led to a flux of highly qualified people from the continent. This is likely to continue and even amplify, if those who previously chose the UK will be deterred by the Brexit changes. Uncertainty is dreaded by both companies and hard-working individuals, so it is only fair to assume that many will prefer not to take chances and go for the safe bet.


Interesting times ahead for Gibraltar firms


Gibraltar has always been an attractive market for tech companies, especially gaming industry ventures, because of its lower taxes. Now that Brexit is just around the corner, major changes are expected to happen and they will affect these firms.

Although there’s a significant degree of uncertainty, the facts currently point towards a bright future for companies based in Gibraltar. The tiny nation has the advantage of EU membership and could use it to bolster its economic environment. Gibraltar residents voted to remain in the European Union, so the government plans on using this to help gambling brands acquire the needed licenses. Competition exists between Gibraltar and Malta between gaming companies and Brexit could tilt the balance. That is why the UK authorities went out of their way to promise that nothing will change.

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