A disorderly No Deal Brexit poses significant risks to the UK tech sector. The potential fallout includes challenges in securing funding for start-ups and complications in managing IT contracts.
Impact on Start-ups
According to GlobalData, innovative UK start-ups are at risk of losing critical funding due to Brexit. The uncertainty surrounding future regulations and financial support is causing concern among entrepreneurs.
The absence of clear post-Brexit policies is making it difficult for start-ups to plan and secure investment, hindering their growth and innovation.
Challenges for Smaller Companies
Global tech giants with a European base are expected to weather the Brexit storm. They possess the resources to adapt to regulatory changes and maintain their operations across borders.
However, smaller companies lack the bandwidth to cope with the expected fallout. Diverging regulations, increased red tape, and talent acquisition challenges pose significant threats to their survival.
Data Flow and Talent Acquisition
Securing the continued free flow of data is a major concern. Restrictions on data movement could hinder the operation of tech companies that rely on international data transfers.
Continued access to talent is another critical issue. The tech sector depends on a skilled workforce, and Brexit may complicate the hiring process, limiting access to top talent from the EU.
David Bicknell from GlobalData emphasises the importance of maintaining frictionless movement for tech products and services. Any barriers could severely impact market access and operational efficiency.
Regulatory Alignment
Ensuring alignment on rules covering digital services is crucial. Divergent regulations could create barriers to market access, complicating cross-border operations and stifling innovation.
Retaining access to EU funding streams, such as Horizon 2020 and the European Investment Fund, is vital. These funds have been instrumental in supporting UK tech companies and fostering innovation.
Views of Industry Experts
David Bicknell highlights the uncertainty surrounding Brexit’s final form, leading many tech executives to adopt a ‘wait and see’ approach. This hesitation is affecting decision-making at all levels.
Large global tech players have a significant advantage. Their substantial presence and resources enable them to navigate the complexities of Brexit more effectively than smaller companies.
Impact on UK Plc
The biggest loser from a No Deal Brexit could be UK Plc. Tech start-ups and scale-ups searching for funding may find it increasingly difficult to attract investment.
The UK has traditionally been a prime destination for US tech investment. However, post-Brexit uncertainty may drive Silicon Valley CEOs to consider alternative bases that offer stability and access to talent.
Government’s Role
The government needs to create favourable conditions for the tech sector to thrive. Without supportive policies, the sector may struggle to maintain its competitive edge.
As David Bicknell succinctly puts it, ‘The UK seems to be setting out to try and win the race with its legs tied together.’ This analogy underscores the challenges faced by the tech sector in the current political climate.
In conclusion, a No Deal Brexit presents numerous challenges for the UK tech sector. Addressing issues related to funding, talent acquisition, and regulatory alignment is critical to mitigating the potential negative impacts.
The government’s role in creating favourable conditions will be pivotal in ensuring the sector’s continued growth and success.