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June 6, 2016updated 21 Oct 2016 4:51pm

Trade, investment, data use and security and influence – the UK digital sector will say No to Techxit

The IT industry's key concerns for UK tech are better addressed by remaining in the EU

By Sam

The UK tech sector has come down solidly in favour of remaining in the EU based on retaining influence on the shape of the digital single market, a stronger negotiating position in the digital global economy, a common security environment, ongoing investment and trade.

Negotiations around data sharing propositions such as Safe Harbour and Privacy Shield with the US 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," says Julian David, CEO of TechUK the industry trade body for the tech industry told CBR.

Mr David says a UK that is outside the EU 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.’"

On trade Mr David said regulation is a reality whether the UK is inside the EU or out.

"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 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."

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The digital tech sector across Europe as represented by its trade associations want the UK to remain, said Mr David with the other national trade associations in France, Germany and elsewhere saying they want the UK tech sector within the single market.

"If you talk to other digital trade associations, they are all saying we want the UK propositions. There’s definitely a view is the UK being in is beneficial to influencing decisions on the DSM. We provided an eight point document on the DSM and everyone of the other national digital trade associations across the EU signed up to it, starting with the French and the Germans. They are saying the UK approach to this is the one we want and if we go this goes too and then we’re not actually promoting the right solutions."

Cloud standards and investment
One objective of the DSM is to avoid formation of national and regional clouds. The position in Europe, and backed by UK tech companies, is that there should be common cloud standards and ‘if the UK voice is lost the localisation agenda could win out.’

TechUK surveyed around 800 members in and ICM polls back in February and March

Mr David says though few tech companies have yet to publically declare a position (Cisco is an exception, read the Cisco UK+I CEO interview) UK tech companies are overwhelmingly in favour of remaining in the EU.

Few of the big tech companies will take a public position on favouring Brexit or Remain but he says on investment ‘but if you listen to the background noise and you’re attuned to the issues, the question marks [around continued investment in the UK in the event of exist] are there.’

There won’t be any withdrawing from the UK market. Clearly the UK is a big enough market for global and international tech companies to be interested in but there is very clear connection between the UK as a focal point for entry into a 500 million person market being a better investment proposition than the UK as a 60 million person market.

This has the potential to become more pronounced should the UK find itself in a contrary position to the rest of the EU over issues such as security or data movement.

"I think there is a lot of tension," says Mr David. "There are anecdotes around this. If you think about where you put an investment and you have one place to put an investment where you don’t know what’s going to happen as opposed to another where you do know, that’s got to be a factor."

"They [international tech firms] won’t say ‘we’re going to withdraw from the UK’ but you can see in other sectors, Siemens and Airbus and a number of car companies, including larger Japanese manufacturers have commented on this."

TechUK is a trade body which represents the interests and views of its members. It is not a political campaign organisation. However based on its membership survey Mr David says it has a mandate to publish those findings and express the opinions of its members.

Around 800 TechUK members surveyed produced the following findings:
Those that support a vote to remain (70%) said the main three reasons were that EU membership makes the UK more attractive to international investment, makes the UK more globally competitive and gives the UK a better deal in its trading relationships with the EU.

– Those that support a vote to leave (15%) said the main three reasons the UK should leave the EU were that the UK would have more flexibility to adapt to a fast changing global economy, the UK would be more globally competitive and the UK would get a better deal in trade relationships with the rest of the world outside the EU.

– A majority of all respondents believe EU policies have a positive impact on their ability to buy and sell (69%) and trade and invest (64%) in the EU. Only 3% of all respondents said these policies had a negative impact on their business.

– 63% of all respondents have operations across Europe and would have to comply with EU rules, regardless of whether the UK is a member or not.

– 65% of all respondents said a decision to leave would be a cause of significant uncertainty for their businesses.

– Three quarters (75%) of all respondents believe the UK would lose influence on the EU issues that impact their business if it were to leave the EU, rising to 82% of respondents with suppliers in other EU Member States.

– Only 9% of techUK members believe that the practicalities of leaving the EU are well understood – down 1% compared to the 2015 survey.

– When asked to what extent, if at all, their companies had started to prepare for a potential UK decision to leave the EU, 62% reported they have made no preparations.

Views on EU Membership
70% of respondents said that the UK should remain a member of the EU

59% Micro (<10 employees)
71% Small (10-49 employees)
66% medium (49-250 employees)
82% large (250 + employees)

15% said the UK should leave the EU

21% Micro (<10 employees)
17% Small (10-49 employees)
14% Medium (50-249 employees)
9% Large (250+ employees)

15% were don’t knows

See the survey report

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