Brexit - What impact will this have on the IT industry?

Introduction

On 23 June 2016, the UK population is set to vote on whether to stay in the European Union (EU) or leave it. Although we are unable to predict what the true outcome will be if the UK leaves or stays in the EU, we have become increasingly concerned about the potential impact that such a decision will have on the UK business industry, specifically in IT.

Key political spokespeople such Boris Johnson, David Cameron and the media have failed in their ability to adequately communicate why people should vote to stay or remain in the European Union. And what impact it will have in our day to day lives, how it will directly affect industries, jobs, and employment/skills shortages. With the imminent approach of polling day, there’s a lot to be said about the EU referendum in online articles, reports, TV debates and live campaigns that have most of the UK public in confusion. Whilst on one hand, it may make the UK economy more competitive, will it be off-putting with regards to inward investment to our thriving economy?

This controversial subject has the UK split into two, team Leave and team Stay which frankly can leave the public feeling very confused. There have been some key points that IT pros have openly expressed in the media, such as if the UK leave the EU it could result in having less favourable terms of conducting business internationally? With others argue that actually leaving the EU gives the UK more flexibility in the global IT market.

Vote Stay

A recent opinion poll conducted by techUK questioned 277 IT business leaders on their views of the Brexit. The results indicated that 70% of the individuals were in favour of staying in the EU, with only 15% supporting the Brexit and the other 15% undecided. A good majority believe a vote to leave would create more uncertainty for their business, resulting in the UK becoming less attractive to foreign investment and force the UK to trade on less favourable terms internationally. You can read more of techUK’s survey by clicking here.

“Our members are clear that a vote to remain is the right choice for the UK technology sector.” - Julian David CEO, techUK London EC4

Vote Leave

On the other side of the divide, those in favour of leaving the EU said by cutting ties it would give the UK more flexibility and a competitive edge in a global economy. The 15% who voted leave, argued it would give the UK a better deal in its relationships with the rest of the world.

Some of the main disadvantages of staying in the EU which has been repeated in research, are issues surrounding the UK’s lack of influence and the regulatory burden imposed by being part of the EU. Tim Critchley, CEO of secure voice comms firm Semafone states that “If Britain were to leave the EU, IT companies could at take comfort in the fact that when it comes to selling software particularly with cloud-based solutions, physical borders doesn’t disrupt the distribution of software products”. He goes on to explain that selling technology to different markets across the world doesn’t generally rely on big, unilateral trade discussions.

Another point that arose is that technology is a sector that’s international, and some of the best technical people come from outside of the EU. These are the people the UK IT companies are failing to tap into by remaining in the EU. The remaining 15% of the undecided votes are still in the balance.

Is our data security at risk if we leave or stay in the EU?

Another big question the UK IT industry should be asking themselves is if the UK leaves the EU what will happen to UK data security?

The privacy shield which has now replaced Safe Harbour only protects the data flow between the US and EU. Last year’s scrapping of Safe Harbour threatened the flow of data between the US and EU, which would have a knock on impact on global trade, commerce and digital economy.

Since the Safe Harbour ruling in October 2015, the UK should expect more storage and processing of data to move into the EU. This dynamic initially favoured new inward investment in London, but if it is no longer part of the EU, it may result in data transferring out of London rather than into it. Having a negative impact on UK data centres.

What does Coreix have to say?

Paul Davies, Technical Director - @paul_davies16

“I feel it would be majorly detrimental to the UK economy and Europe as a whole. With 72% of investors citing access to the European single market as important to the UK’s attractiveness according to a recent Ernst & Young survey, this referendum on Thursday will have the potential to affect foreign direct investment negatively with 31% of investors indicting that they are likely to freeze or reduce investment.”

Anne-Marie Lavelle, Marketing Manager, Coreix - @Annielavelle

“Political scepticism and scaremongering on both sides has caused mass confusion amongst those living in the United Kingdom about what might be the potential impact of the UK exiting the European Union and what will be the implications be for all of us. As a major international commercial, financial and technological hub with best in class connectivity, the UK needs to maintain and enhance its reputation as a leading competitive environment which continues to attract billions of pounds from foreign direct investment each year from companies looking to use it as their respective EMEA base, particularly for their disaster recovery requirements.”

Whilst many companies have to date looked to Britain, in particular London, as a key connectivity hub, the potential impact of a leave vote will cause concern for foreign enterprises whether or not these organisations will want to maintain their primary presence in the UK or in fact relocate elsewhere with Frankfurt, Amsterdam and Paris being alternative attractive viable options. The potential shift will have an impact on regulations and this may affect their propensity to remain.
With London looking to be considered as a start-up innovation hub over the next few years, we need to continue to encourage these companies and highly educated individuals looking to contribute and make a difference to the UK economy to continue to do so and address the skills gap. As a major international hub, we need to continue to encourage multi-national companies to invest in the United Kingdom, to provide jobs, employment, taxes and much sought after technical skills and expertise. VOTE REMAIN. “

In summary

With all this being said, it’s not possible to predict the true outcome of the UK leaving the European Union. What is clear is that a Brexit will cause a few waves for the UK’s IT sector and how we stored data. You can join in with the debate by leaving your comment below or you can tweet us your thoughts to @Coreixnet