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June 20, 2016updated 22 Sep 2016 4:03pm

10 reasons why UK tech is against Brexit and voting remain in EU referendum poll

Trade, Data Privacy, Foreign Investment, Data Sharing - just some of the reasons as to why UK tech is firmly in the Remain Camp.

By Ellie Burns

One of the most important votes in UK history is just three days away, with the country heading for the polls on Thursday 23 June to vote to stay or leave the European Union.

We have had months and months of arguments on both sides of the in/out debate – economy, trade, investment, soverignty, and immigration just some of the topics hitting the headlines.

While you may be in, out or undecided, the UK tech industry has publically declared its allegiance to the reamin camp, with a myriad of tech business leaders and tech organisations publically stating their support for a Britain inside the EU.

A techUK poll found that 70% of the 277 tech business leaders they surveyed were in favour of styaing in the EU, with only 15% in favour of a Brexit and a further 15% sitting on the fence.

But why does UK tech want to stay in the EU. Correlating all arguments put forward by various individuals of the UK tech industry, CBR gives you the top 10 reasons why UK tech is voting remain.


1. Brexit could stall the UK’s tech growth engine

Three days shy of the official polls opening, 34 of the UK’s leading tech bosses published a letter in the Times newspaper on Monday 20.

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High-profile individuals such as David Stokes, CEO, IBM UK; Andy Isherwood, Managing Director, UK and Ireland, Hewlett Packard Enterprise; Julian David, Chief Executive Officer, techUK; Michel van der Bel, UK CEO, Microsoft; and Cormac Watters, Managing Director, UK, SAP, were among the 34 signatories of the letter.

Publically standing firm in the Remain camp, all 34 bosses argued the point of a stronger economy and a better position for international trade. In the published letter, the tech leaders said:

"Tech companies are not starry eyed about the European Union, but repeated surveys of start-ups, SMEs, investors and corporates make it clear that the overwhelming majority would vote to stay in.

Why? Because we believe staying in the EU is the best choice for the UK economy. According to techUK members, most of whom are small businesses, being part of the EU makes it easier for them to trade and do business across Europe. It makes the UK more attractive to international investment and makes Britain more globally competitive. A decision to exit the EU would leave tech firms and their customers, facing significant and prolonged uncertainty and leave the UK side-lined on key decisions that will shape a digital market of 500 million consumers.

The UK’s tech sector is a global success. It is growing faster than the rest of the UK economy and creating new businesses and jobs across the country. EU membership has underpinned that success. A vote to leave would undermine it.


2. Digital Single Market

The Digital Single Market is an EU strategy to open up digital opportunities for businesses and EU citizens, aiming to break down regulatory barriers and move 28 national markets into one. The EU claims that such a move to a Digital Single Market could contribute billions more to the economy and create hundreds of thousands of jobs.

Tech leaders are seeing the Brexit as a threat to the Digital Single Market, and a threat to the market of over 500 million consumers. IBM UK boss David Stokes said in an internal blog to staff: "As a large, globally integrated business with a strong presence across the EU, IBM sees significant benefits from EU economic integration.

"The UK tech industry employs 1.56 million people and contributes £1 in every £10 to the local economy. As a member of the EU, the completion of the Digital Single Market will further accelerate this success for UK tech."

3. Foreign investment

In a letter published to the Financial Times on May 18, a number of tech leaders once again declared their public support for the Remain camp. Signatories including Tom Enders, Airbus CEO; Michael Bloomberg, CEO Bloomberg; and Chuck Robbins, Cisco CEO, spoke out about how the UK being part of the EU was a major factor in their investment in the country. They warned that a Brexit would hit UK growth and impeded foreign investment.

"The UK is consistently ranked as one of the most attractive destinations in the world for investors, and it is the top destination for inward FDI (foreign direct investment) in Europe. There are many reasons for this: a culture of innovation and creativity, a flexible labour market, a predictable and sound legal system, the English language. However, for us, EU membership is also a big reason why we have chosen Britain.

"Recent suggestions that the UK should leave the single market if it exits the EU are particularly concerning and potentially hugely damaging. According to surveys, almost three-quarters of foreign investors cite access to the EU’s single market as a key reason for their investment in Britain.

"If there is one thing we as investors don’t like, it is economic uncertainty. As several important bodies have said — the International Monetary Fund, Bank of England, London School of Economics, the Treasury and others — leaving the EU would mean a shock to the UK economy, hurting growth, job creation and foreign investment. And no existing alternative outside can match EU membership in terms of access to the single market and a say over the rules governing trade and investment in that market."

4. Data Sharing

Linked to the Digital Single Market, data sharing could be hit if the UK were to vote leave. Data sharing is already a contentious issue, with regulations such as GDPR, Safe Harbour and Privacy Shield adding to the data privacy debate.

Talking to CBR, Julian David, CEO of TechUK, argued that current and future negotiations with the rest of the world around data sovereignty, sharing and data privacy are better served as part of the EU.

"If we’re in Europe and everything that happens is governed by the single market, everything that happens outside is where these arguments about data handling hit the road. And the fact that we are inside the EU means we can say to an economy as big as the US, if you don’t comply with our wishes, you can’t have our data. As a single actor being the UK you’re outside." Mr David told CBR, going further as to say that a UK that is outside the UK could push the matter further…. "If you tie that to the direction with Investigatory Powers Bill in the UK and being outside Europe and developing our own security approach we could find the situation that those across Europe say, ‘you can’t use European data in the UK.’"

Ross Fraser, country manager UK&I for EMC, echoed these concerns, saying:"We believe the UK’s continued support of a successful EU-wide Digital Single Market will allow the EU’s digital economy to thrive. A continued push for a robust and consistent EU-wide data protection and privacy framework will also deliver a positive environment for consumers and a comparatively straightforward one for business.

"The new EU Privacy Shield remains a work in progress and again, we want the UK to keep its place at the table during ongoing negotiations."


5. Data Privacy

Intrinsically linked to data sharing, data privacy is a huge factor in the upcoming EU referendum – especially due to the incoming European Data Protection (GDPR) law. This regulatory law set out by the European Commission aims to strengthen and unify data protection for citizens of the EU. If the UK were to exit from the EU, then the country would not have to enforce the regulation. However, as Rafael Laguna, Founder and CEO of Open-Xchange, argues, this could leave citizens of the UK wide open to data abuse. He said:

"A vote to leave will mean the UK will cut itself off from the most advanced privacy market in the world, at a time when the UK government continues to assault privacy rights, against the public’s wishes – 3 in 5 brits believe security forces should not be able to access personal data, according to our recent research.

"Without the EU’s GDPR, UK citizens can’t be guaranteed that their user data is handled securely. Without the EU’s Digital Single Market, UK citizens will be penalised for buying from European retailers online. As more hyperbole and half-truths are peddled by both sides on the topics of immigration and economics, the impact on data privacy is one area where the right choice is obvious."

However, GDPR in the Brexit scenario is not clear cut. Any company holding European data would have to comply with EU law. Nic Scott, Managing Director, UK & I at Code42, said:

"True, if the UK exits the European Union, then it will not have to enact the GDPR. But British businesses would have to comply with the GDPR should they be holding European data. What is likely in the event of a ‘Brexit’, is that the "GDPR-bar" will be set higher for the UK rather than lower. The country would likely want to be able to reassure the European Union that its data protection laws were on par, or superior, so as to not scare away foreign investment.

"However, there is no guarantee the EU would accept a new UK-centric data policy, and any adequacy assessment of new regulation would almost definitely reflect the new GDPR regime and not the EU directive that is in place today. This may well go as far as demanding that their data is stored in EU territories rather than the UK."

6. Access to talent

The UK is facing a digital skills gap, with a recent report from the Commons Science and Technology Committee finding that 12.6 million UK adults do not have basic digital skills. The report found that the digital skills crisis is costing the economy a staggering £63bn per year and that 745,000 digitally skilled workers are needed by next year alone. However, this digital skills gap could potentially get even bigger if the UK were to exit the UK. Christopher Evans, Head of IT at JAM Recruitment, said:

"Put simply, the UK doesn’t currently have the required levels of trained workers within the IT industry to leave the EU. With the market already suffering due to a lack of talent in the permanent market, this will only become more challenging should the UK vote to leave the EU, due to employee pools being restricted. As a result of this further amplified talent shortage, more companies will be looking at the contract market as a solution. Whilst this might be a short-term fix in terms of getting staff in, it will inevitably increase costs, whilst reducing the retention of knowledge and intellectual property within companies.

"Further to this, employers within the technology sector are already having to increase their efforts to retain experienced staff, something that would become even more of a struggle should the ‘Yes’ campaign prevail. Leaving the EU would further add to the pressure on employers, as demand for skilled professionals within the industry would grow even stronger, due to the draw of contracting becoming ever more lucrative."

This fear of talent shortage complements the findings of a techUK survey which found that 42% believed that the UK would create more jobs in the EU.

7. Trade

According to a techUK poll of 277 tech business leaders, 75% said that EU membership gave companies a better deal on trading within the EU. When talking to CBR techUK CEO Julian David was quick to say that trade would not cease if a Brexit won at the polls, but that opportunity and consistency were the draws of being a part of the union.

"We still have to trade. There is greater strength from being inside the market. Everyone (UK tech firms) says we’re going to trade there (over 60% of UK tech companies have customers in Europe). The advantage of being part of the EU is a consistent approach."

"Not every part of European legislation is exactly as we’d like it but being part of a 28 strong market if they get the digital single market (DSM) right there is an increased opportunity."

Many leaders have pointed to the loss of automatic access to the EU market and the renegotiation of new independent Trade Agreements if the Brexit vote wins. It is unclear if new agreements with the UK would be a priority for other trade groupings and countries, nor that the UK would have notable negotiating leverage.

Erki Kert, CEO, Big Data Scoring, however, says that ‘every cross-border contract would be torn up and have to be renegotiated’, while Cisco UK CEO Phil Smith warned that the UK would face "heavy competition from Paris, Berlin, Rome, Israel, and other places."

8. Uncertainty

There are a myriad of uncertainties when it comes to the Brexit – simply because this exit of the EU by a member state has never happened before. Currency, economy, skills, investment, regulation etc etc are all put on uncertain ground if the UK were to leave. A UK exit from the UK could even lead to the total collapse of the EU itself – a point which Ross Fraser, country manager UK&I for EMC poses a real threat to the digital future of Europe.

"At the heart of the decision is the significant lack of certainty for businesses when it comes to the viability of different possible post-Brexit scenarios, which could range from continued participation in the European Economic Area (EEA) and European Free Trade Associate (EFTA) to attempting to negotiate our own bi-lateral trade deals with Europe and the rest of the world. Whatever the outcome, it will take time to agree in the UK and beyond, with no guarantees of a positive long term economic impact for UK business.

"Our concern is that this will slow business and Government decision-making for a period of time. Destabilisation of the wider EU is also a very real issue. The net result of any of these outcomes will be that British and European businesses, already hard-pressed to deliver the digital transformation they need to be competitive, will find it even harder to make the decisions they need for their future."

9. UK will be more vulnerable to cyber attacks

According to AlienVault, 38% of those who work in the IT industry fear that a Brexit would leave the UK more vulnerable to cyber attacks. This greater vulnerability would be the result of the UK no longer benefiting from shared intelligence with other EU states.

Javvad Malik, security advocate at AlienVault, comments: "With the EU referendum just days away, the IT security industry seems to be siding with the ‘remain’ camp. Rather than offering an escape from the EU’s red tape, most people believe that they would still have to negotiate their way through complex legislation such as GDPR even if Britain does leave the EU. But what’s more, a significant proportion of those surveyed believe that being part of the EU actually benefits them and their work.

"This is especially true of the industry’s attitudes towards intelligence sharing between EU states. Cyber attackers pay no attention to geographical boundaries, transcending borders and jurisdictions to maximize malicious effect. The truth is that we can provide a stronger and more robust defense against emerging threats by working together and sharing information."

10. Innovation & Startups

Exit from the Digital Single Market, a decline in foreign investment, access to talent and the renegotiation of trade deals – all of the previous arguments for Brexit will hit hard at innovation, hindering start-up attraction and growth across the UK.

Ed Molyneux, CEO, co-founder of FreeAgent, said: "EU membership is also beneficial for hiring too. For tech companies, in particular, it opens up the opportunity to hire world-class developers from Europe who can work alongside the best talent from the UK to create more sophisticated technology, develop better products and services and to help build bigger businesses.

"Closing the drawbridge and isolating the UK from Europe through a ‘Brexit’ strategy is likely to be extremely unhelpful to any UK business that has aspirations to grow outside of the UK’s borders."

One of the fastest growing start-up tech industries in the UK is fintech, a sector where the UK is outpacing other European competition. However, like other start-ups, a Brexit could completely undermine the growth and success the sector has had up to now. , Rajesh Agrawal, Founder and CEO of Xendpay, said:

”Innovation and investment are at the heart of London’s, and more broadly the UK’s, success in recent years. The booming Fintech sector has been one of our greatest triumphs since the turn of the millennium, and the UK can rightfully call itself the world leader in this field – and this is no accident.

"But if the UK were to leave the EU, the free movement of goods and capital that have been so crucial to the success of the Tech and Fintech industries would be put at unnecessary risk. The capital has carefully created a nurturing environment and become an international centre for Fintech firms of all shapes and sizes, who see London as a gateway to the 500+ million customers over the channel; it would be senseless to cut ourselves off from these."

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