Tooling Britannia: Why Brexit will not dent UK’s tech ambitions

5 Dec 2016

The Brexit vote was a clarion call that Europe is in turmoil. Will science and tech be the silver lining? Image: S.Borisov/Shutterstock

It is ironic that the one subset of the UK economy that had every reason to resist Brexit the most – the tech and scientific industries – may be the UK’s one route out of this economic folly, writes John Kennedy.

Six months ago, I went to bed imagining that the next day, everything would be alright with the world. Wrong. My phone was hopping the next morning with reactions on Facebook and Twitter to the news that the UK had just voted to leave the EU.

The absurdity of it gave way to anger and incredulity in my mind. But rather than just lash out, I put my mind in the eyes of those that voted out. It became immediately apparent that this was a vote won by the tiniest of margins, which was effectively a reaction that came from the hearts of a disenfranchised population in underinvested-in, crumbling cities and towns across the UK.

‘The UK’s superb industrial, technological and scientific heritage is the one silver lining in the Brexit cloud’

It was a reaction to not being listened to by the out-of-touch political elite. It was a political gamble by one of those elite that backfired. It was the result of manipulation by a cynical right that was on the rise. It gave a kind of legal substance to the rising xenophobia sweeping Europe and an unjust attitude against immigrants and refugees. It was a vote made in the hope or memory of better times. But those better times will not necessarily follow.

The vote to leave was strong everywhere but in London, a micro-economy of its own where everything is OK, or as it should be for the rest of the UK. And, of course Scotland, which is doing everything in its power to stay in the EU.

London calling

A thriving economy, a powerful financial services industry, a thriving tech scene that attracts the lion’s share of European venture capital investment – London had a lot of reasons to stay in the EU. Top of the list is talent and a mobile European population.

You may argue that voter apathy on the part of the youth – those who may be hurt the most by Brexit – was also to blame.

Whether Britain can ever hope to negotiate all of these new trade agreements in a human lifetime is anybody’s guess.

The alacrity of Theresa May’s government to implement Article 50 of the Treaty of Lisbon is interesting on one hand and troubling on the other, when you hear talk of quotas and investigations of workplaces on overseas workers. It is an unjust attitude when you consider the vast number of people from overseas who keep the lights on in the UK, especially within its highly prized NHS.

Ireland’s bonds with the UK are down to a shared history but especially a tradition of emigration to the bigger economy next door. Many of us have family and friends who live and work in the UK, and I know for a fact that talk of police swoops on workplaces was hurtful for many.

While the whole thing reads and feels like a descent into the abyss, it is ironic that the tech economy – one of the segments of the UK economy that lobbied hard against Brexit – currently stands to gain the most in the aftermath of the Brexit vote.

Dreaming of a new England

May’s government is doubling down on science and tech investment because it knows the tech economy is booming and yields the greatest opportunities to create new businesses, generate exports and create the jobs it has promised voters after Brexit.

The UK’s superb industrial, technological and scientific heritage is the one silver lining in the Brexit cloud.

On the talent front, the UK has an edge because unlike Ireland and the US, it has already made computing and coding a part of its school curriculum for children as young as six.

But in its recent autumn statement, you could see just how the UK plans to step up its digital game.

The UK Chancellor of the Exchequer, Philip Hammond, among a raft of measures designed to strengthen the UK economy post-Brexit, revealed a new National Productivity Investment fund. This is being developed to provide £23bn of additional spending, covering everything from transport to communications and research and development (R&D).

The plan includes making £390m available to invest in the future of transport technology, such as driverless cars, renewable fuels and energy efficient transport.

This incorporates £100m going towards testing infrastructure for driverless cars, £150m to provide at least 550 new electric and hydrogen buses to reduce emissions from 1,500 existing buses, and support for taxis to become zero emission. It will also make £80m available to install more charging points for ultra-low emission vehicles.

There will be a two-year 100pc first-year allowance for companies that install electric charge points and £450m will also be spent on trialling railway digital signalling technology.

£1bn will be made available to invest in full-fibre broadband and trialling 5G networks.

From April 2017, the UK government will also provide a new 100pc business rate relief for full-fibre infrastructure over a five-year period.

It will also see a major increase in R&D funding for universities and businesses with R&D projects, to help the UK remain an attractive place to invest in innovative research.

This will see scientific projects backed in the areas of robotics, artificial intelligence and industrial biotechnology.

Not only that, but the UK is also reawakening its heritage in technology in a number of novel ways, the most interesting so far being the resurgence of Bletchley Park – home of the Enigma codebreakers – as a cybersecurity school. Bletchley Park is to be the UK’s first National College of Cyber Security and will be known as Qufaro.

But the biggest elephant in the room is corporation tax. Currently at 20pc, what does the UK intend to do? Will it slash it to grab more international investment?

Will Ireland’s 12.5pc corporate tax rate and the fact that we will be the last English-speaking country in the eurozone be enough to keep us competitive?

Dublin calling

In Ireland, where we merely returned to the polls again and again just to give the powers that be the answer they wanted, the Brexit result was met with surprise.

“What on earth were they doing? What are they thinking? Are they mad?”

While we may remember keenly the betrayals of the European Union following the financial collapse of 2008 and how Ireland was forced to carry a disproportionate amount of Europe’s banking debt, we still see the European experiment as a pragmatic exercise.

Some suggested Ireland should make hay while the sun shines. There has been talk of Ireland being a fintech hub to replace London, while many other cities in Europe from Frankfurt to Paris also sharpened their tools in anticipation.

Indeed, even the IDA’s latest global advertising campaign is designed for competing effectively in a post-Brexit world. “IDA Ireland will compete for any mobile investment that results from Brexit,” IDA CEO Martin Shanahan said when the campaign was unveiled on Friday (2 December).

Despite Brexit, tech giants already present in the UK are doubling down on their investments there. Google is to create 3,000 new jobs in London, Facebook is creating 500 new jobs in the city and Apple is moving to a new campus at Battersea Power Station that can accommodate 3,000 people. Do the tech giants know something we don’t?

These expansions are most likely due to the fact that with close to 70m people, the UK is still an economy to be reckoned with.

Navigating a Europe in turmoil

For Ireland, there are fears of what a hard border could mean in terms of the Good Friday Agreement – it raises the spectre of the bad old days of the Troubles – and especially, a diminished economy in Northern Ireland. When people have jobs, dignity and a thriving local economy, the guns are put away pretty quickly.

This is why we need to pay special attention to the UK’s digital and scientific ambitions; there is a lot of common ground there, and if anything, we need move to cooperate and collaborate rather than just make hay from seismic upheavals.

A month ago during the Web Summit in Lisbon, I went to bed thinking everything would be OK with the world. The next morning I awoke to the news that Donald Trump was president-elect of the United States of America.

At breakfast, normally voluble American business people spoke in hushed voices. Their shock was palpable.

Last night I went to bed thinking once again, everything would be great on Monday (5 December).

This morning, I awoke to a Europe in turmoil.

In Italy, the prime minister Matteo Renzi this morning resigned, following a defeat in constitutional elections. In Austria, the election of a far-right politician in Europe, Norbert Hofer, was narrowly avoided. But only just.

Across Europe in the next year, uncertainty will reign as citizens use the poll booth to voice their dissent against the political elite that they deem out of touch with their reality. The rise of a dangerous right using cynical lies and promises that capitalise on fear and disenfranchisement will sound ominously familiar to any student of history.

The UK is on an inexorable path out of the EU. But it is also our closest neighbour and largest trading partner. The fact that it sees science and technology as a way forward is a sprinkle of hope in these dark times.

Diplomacy and cooperation with our nearest partner in the spirit of advancing humanity and not wilting back to a dark and terrible past should be the order of day. Not making hay.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years