As thousands of businesses breathe a sigh of relief now the Brexit deal has been agreed, one leading tech figure thinks the EU remains important for the UK.
Julian David, chief executive of TechUK, spoke to City A.M. about his thoughts on the Brexit deal for the tech sector and the future for the industry post-Brexit.
‘We can’t tear everything up’
Recent research shows that global investors are flocking to London despite pandemic and Brexit uncertainty.
Some $10.5bn (£7.7bn) was invested in 2020, a quarter of Europe’s whole VC investment for the year, according to Dealroom data.
But David is clear that while the UK’s tech industry may be leading the continent, Europe remains an important partner and the UK should not “tear everything up”.
“We’ve got to be practical, we can’t suddenly switch billions of pounds worth of trade in the tech industry and beyond somewhere else,” he tells City A.M.
“When companies and investors are looking at the UK they are going to be looking at the size of the market they’re investing in. They’re going to ask ‘If I invest in the UK is that it? Have I just got the UK market? Or can I use the same products and solutions in other markets?’ The biggest obvious one is the European market.”
The UK’s tech industry is punching well above its weight, ranking fifth on the worldwide list for VC tech investment over the past five years. But David is right, the size of the UK’s industry is dwarfed by an entire continent that is still attracting reams of investment.
David’s solution? To remain aligned with EU regulation, which may be anathema to some more of the more pro-Brexit characters in the industry.
“We need to be sure that we can still trade in the EU…That’s why we think that being close to them on a lot of regulations makes sense.”
And the tech head punchily warns that if the UK turns its back on one of its largest markets it could fade into the background. “If you’re not global eventually you’ll be out of business in tech.”
It is clear that what fundamentally underpins David’s position on this is trust. Startups are constantly balancing innovation and regulation, ensuring they are trusted to use customers’ data.
“Our members are certainly not at the stage of the game saying we want to rip everything up. They want to know how to innovate… and do more things nimbly.”
Brexit deal is ‘negative neutral’
It is evident that David thinks collaboration and innovation with Europe is key for the UK as it navigates the post-Brexit and post-pandemic landscape. But what does he make of the agreed deal and how well looked after has the tech sector been?
“I would put it as a slightly negative neutral,” David says. But he concedes it is better than a no deal scenario which would have been a “disaster”.
“We are encouraged by what we’ve seen so far for the tech industry – there’s a strong digital chapter in the agreement which isn’t unique but it’s quite unusual… the idea there’s an ongoing dialogue is really encouraging.”
Other elements that stand out are the lack of tariffs and a doubling down on the UK’s commitment to European R&D funding programme Horizon 2020.
“R&D really is more than a country activity. To be in [that programme], which is across a big set of countries and includes non-Eu countries like Israel – an R&D powerhouse – is encouraging.”
The future looks bright for the UK tech industry, with recent research showing that increasingly global investors are flocking to London in particular. But given the solid relationship between the continent and the UK, David is right that the industry should not give it all up now a Brexit deal has been agreed.