Back in December, I wrote that Britain must embrace the tech market if it wanted to remain a global player post-Brexit. Increased EU regulation of the tech sector represented a window of opportunity to the UK, who could seize the chance to snap-up tech firms looking for a new home in Europe; that is, if the British government could resist the temptation to follow in the Union’s regulatory footsteps.
Fortunately, these two months into the new year have shown a lot of promise for Britain. In stark contrast to the capital’s decision last year to deny travel-share firm Uber a license renewal, the UK seems to be warming up tech; and in doing so, Britain just might come out on top following it’s divorce from the EU.
Welcome to London
Amid all the fears and predictions of Britain’s post-Europe future, London has been busy cementing its place as the new home of technology. A press-release from London & Partners, the official promotional company for London, stated that 2017 saw record highs in tech investment and funding.
In fact, 2017 saw almost double the amount invested into UK tech as in 2016, up from £1.63bn to £2.99bn.
It isn’t just money that’s flowing into the capital, however. Data from LinkedIn suggests that London is way ahead of its European counterparts in attracting talent, with over 20% of tech workers moving to the UK from outside of the EU, and 17% of those moving between EU Member States.
Evidently, Brexit hasn’t dampened tech investor’s love for London, and British tech has a promising future as a result.
Why is Tech so Important?
While the service sector has long formed the crux of the British economy, recent years have seen startling growth in the significance of the UK tech market. In 2015, the Gross Value Added (GVA) of the British tech sector was £118.4bn, or just over 7% of the total GVA.
The tech market is likely to become an ever-more significant factor for the British economy, as its GVA grows far more quickly than other industries. Between 2011 and 2015, for instance, the GVA growth-rate of the tech sector was almost 4% larger than that of the British economy overall.
Of course, the increasing significance of the tech economy is hardly a British phenomenon; according to the EU, the digital sector is growing around 7 times as fast as the overall economy.
But with tech companies increasingly choosing the UK over the rest of the continent, Britain now has the opportunity to reinvent itself post-Brexit – and secure its place in the tech revolution.
It seems as though this message has resonated with the UK government. At the World Economic Forum (WEF), British Prime Minister Theresa May spoke extensively of Britain’s preparedness to embrace new tech:
“For the forces of free trade and technological progress which have brought us to this point are as nothing in comparison to their potential to enrich the lives of our children and grandchildren.
The UK has a proud history of stepping up, seizing the opportunities of our time and shaping the international rules and partnerships that can deliver progress for all.
We stand ready to do so again”.
This new attitude is a promising one for Britain, especially if new regulation follows the PM’s pro-free trade, pro-tech outlook.
Fortunately, this seems to be the case. Almost a fifth of all claims for Research and Development (R&D) tax credits in 2015-16 came from ‘professional, scientific, and technical companies’, and claimed £320 mln in tax relief. This figure constitutes around 25% of the overall amount of cash relieved from tax.
Furthermore, ‘information and communication’ companies represented an even bigger slice of the tax-relief pie, with 27.23% of claims coming from this sector, and £385 mln (30% of the total amount) in relief being granted.
This willingness to offer tax relief to tech firms is certainly promising, and suggests that the UK could offer a free market in which tech may further innovate and grow.
Although the UK has hit a few snags with tech in the past, namely through attempts to control what tech companies do with the information they gather, as well as the aforementioned license snafoo with Uber in London, overall it seems as though Britain is willing to accommodate the new market.
If Britain continues down this path, and allows its tech sector to flourish, we might just be lucky enough to see it become the Silicon Island once Brexit has been put behind.