BREXIT update: UK Tech scene’s spirits low, but there is some hope

union jack blended with eu flag with eu stars overlapping brexit

New evidence suggests that the UK’s tech scene isn’t dealing with Brexit all that well with nearly three-quarters of respondents believing that the business environment may get worse.

The evidence comes from a new survey conducted by Tech City UK, which surveyed 1,200 people working in tech (of which 60% are CEOs).

The biggest takeaway from the survey is the conclusion of 74% of respondents that the business environment post-Brexit could get worse. However, despite this negative outlook, 69% of businesses have said they are unlikely to slow down hiring and 36% are actually getting on with “business as usual”.


Concerns about talent quality

A post-Brexit Britain is forcing tech companies to how to retain and hire non-UK talent, with half of respondents (51%) believing it will now be much harder to do.

This ties to what they perceive to be an unclear position on EU migrants as seven out-of-ten employers surveyed want to hear a clear message on EU residents’ ability to live and work in the country.

Just under 80% of employers actually want to see the visa process improved so as to attract talent.


Growth outlook

Growth outlook didn’t look too pessimistic as only 22% expect to scale back their planned growth ambitions. However, 51% say they plan to raise capital outside the UK next year.

London street people

Gerard Grech, Tech City UK CEO said:

Many workers, entrepreneurs and investors in the digital economy wanted to remain in the EU. Now, as the initial shock at the result starts to fade, an air of pragmatism is settling in.

I am also detecting cautious optimism as the possibilities of life after Brexit begin to come into focus. No, it wasn’t what we expected. But yes, there are unexpected upsides and very real opportunities.

He also highlighted that many companies are not bothered by Brexit and continue to invest money in British companies. He cited large investors such as Atomico, Index Ventures, LocalGlobe, FoundersFactory and Balderton Capital, who all said they would continue to seek out the best-performing British companies.

On the whole, Grech argued that there is much to be optimistic about:

There is solid ground for optimism. The UK digital economy is growing 32% faster than the wider economy and is creating jobs 2.8 times faster. Of Europe’s tech “unicorns” – young companies valued at a billion dollars – almost 40% are based in Britain.

They include the London-based FarFetch and Blippar, the Hut Group in the North West, and Edinburgh-based FanDuel and Skyscanner. Nearly one-third of all European venture capital funding consistently comes to the UK.

We now have the second highest levels of venture capital invested per capita in the world, after the US.

London 610 200

The optimism is certainly backed up by votes of confidence in London and the UK from the likes of TransferWise’s Taavet Hinrikus and the apparently unfazed nature of challenger banks.

However, this outlook should be placed in the wider context of less rosy stories. In the science sector, strong doubts have already led to British academics being asked to leave EU-funded projects.

These doubts are highly likely to permeate the bullish Tech scene, as Damian Kimmelman, chief executive of London-based business intelligence startup Duedil, told the Telegraph recently that Brexit has caused significant uncertainty in the market and it’s now harder to raise money, especially when the goal-posts are changing every day.

Grech however, responds to this by saying:

As far as investors are concerned, those who understand the true risks and rewards of investing in the tech sector – which has always been considered risky – will be more committed than ever. Those who were fair-weather friends will seek easier ways to make money, and we will be better off without them.


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