We’re undoubtedly approaching the end-game when it comes to Brexit, with Theresa May’s much-maligned Brexit draft deal still on the table for her colleagues to sign.
While some have suggested that the deal does not deliver on the promised made by prominent Brexit campaigners, this is arguably not Mrs. May’s fault and her draft text at least minimises the economic disruption likely to be experienced by businesses throughout the UK. So despite concerns about a potential brain-drain post-Brexit, the proposed withdrawal deal could soften the blow over the course of the next few years.
Of course, some sectors may already be ideally placed to enjoy a significant boom after Brexit. Take the tech sector in the UK, for example, which is worth in excess of £180 billion and leads the way in fields such as fintech and financial services.
How has the Technology Market Fared in the UK Since the Vote?
The tech market (and particularly the fintech sector) is particularly important to the UK, with London’s so-called ‘Silicon Roundabout’ central to its continued success.
From a global perspective, the UK market only trails the U.S. and China in terms of size, while London is more than match for cities such as California when it comes to market reach and funding.
When it comes to investment, tech firms in the UK have continued to benefit from a steady flow of capital, receiving more than £5 billion in venture capitalist funding since the June 2016 referendum vote. During the same period, France (£1.55 billion), Germany (£2.15 billion) and Sweden (£644 million) have failed to get anywhere near this number, despite reporting superior economic performance overall.
This trend is set to continue, with the world’s leading tech firms yet to be deterred by the impending prospect of Brexit. In fact, Apple is due to move into a brand new European HQ in London in 2021, while Facebook (News - Alert) is currently doubling the size of its existing office in the capital.
Will we See a post-Brexit Boom in this Market?
Of course, some may argue that this investment has been amplified by the weakened pound, which has continued to trade in a narrow range since the referendum vote.
It’s also widely believed that the growth of the technology market in the UK depends largely on the acceptance of a viable Brexit deal, similar to the one that Mrs. May has already proposed to the Cabinet. Remember, an estimated 70% of UK tech executives wanted to remain in Europe prior to the 2016 vote, while there was also staunch criticism from the sector following Mrs. May’s war-like rhetoric in the autumn of the same year.
However, the picture is a little more complex in the current climate, especially with some firms having benefitted from the drop in the pound. Companies that deal predominantly with U.S. customers or nations outside of the EU will also be un affected by Brexit, so the prospect of a no-deal is not so concerting for them.
This is reflected by a survey of mid-market tech, media and telecoms companies commissioned by consulting firm RSM, which revealed that 40% believed that a no-deal Brexit would be favourable for them. A further 31% said that this would have no impact on their future turnover, with just 20% suggesting that it could harm revenues.
This positive sentiment, coupled with continued investment into British tech firms, seems to have fortified the industry and increased its capacity to cope whatever happens post-Brexit. This could well see the market experience some kind of boom after March 29th, 2019, especially if the pound experiences a further decline in value.
For now, of course, there’s nothing to do except see how the final negotiations play out and wait for the final exit deal to be announced. This will still have a significant bearing on the short and longer-term future of the technology market, and it must be remembered that a no-deal could still wreak havoc if it’s not managed effectively.
