How has Brexit affected London's tech sector?

Britain's business reputation has taken a hit, argues London Tech Advocates founder Russ Shaw, but the fundamentals are still there.

by Russ Shaw
Last Updated: 03 May 2019

Last month I travelled to Wuxi, 100km outside Shanghai and, given its population of over six million, a ‘small' city by Chinese standards. At the event with Wuxi leaders, I was the only Westerner there and was speaking to an audience about the relationship between London tech and China. 

Despite the language barrier and the relative lack of awareness about the UK business landscape, everyone from the Wuxi municipality had the same question – why is the UK doing this thing called Brexit and what does it all mean?

In my role I am fortunate enough to go to tech hubs around the world. The extraordinary growth of London’s tech sector is the envy of many tech ecosystems globally. Everyone wants to know how we scaled so quickly, how policy fuelled growth and how we develop talent. Now, a country that was previously seen as the paragon of sense and rational progress is becoming anything but.

In a recent survey of the Tech London Advocates community, 87 per cent of the city’s tech companies think that Brexit has already damaged London’s international reputation. The impact of this is starting to be felt in terms of people and money – the two most important ingredients to any tech cluster. 

One in four tech companies believe they have missed out on investment due to investors deferring decisions until greater clarity is achieved on Brexit. Overall, tech investment is increasing, but it now seems irrefutable that Brexit is limiting the city’s full potential. 

However, if investment figures are a cause for alarm, then the extent to which Brexit is exacerbating the talent shortage should have everyone at panic stations. London’s great strength has always been its ability to attract world-class talent, creating a melting pot for new ideas, innovations and collaborations in the process.

We have nearly 50,000 long-term tech vacancies in London, despite tech companies desperately calling for more talent. We aren’t producing enough home-grown tech talent (which must be a top priority), and we are also sending the wrong message to potential applicants around the world. Worse still, when tech specialists do want to come to the UK, the current visa system is time consuming, costly and frequently frustrating. New visas are coming, but they are not fully operational.

I have often said that I wanted to see London as a globally significant tech hub by the time I reached the age of 60. With four years left, I am convinced that London still has that potential to stand alongside Silicon Valley and the Greater Bay Area in China as one of the world’s most important tech clusters. However, we are now seeing just how much harder tech companies are having to work in London to make that a reality.

Government can help to create the best possible conditions for growth. Brexit has obviously had the inverse effect of that, so it is now incumbent on the private sector to ensure that post-Brexit Britain is defined by the success of the technology industry. 

To retain the UK’s position as a leading digital nation and the top tech nation in Europe we need to change the conversation about the UK and business.

None of the characteristics that have made London the tech capital of Europe have disappeared. We still have the most mature investment community, the highest number of tech unicorns and a considerable depth of talent.

We need to embrace diversity and inclusion, making London the best place in the world for female founders, for black and minority ethnic business leaders and for inclusive workforces.

We need to consolidate relationships with tech clusters around the world, exchanging ideas, talent and investment, showing that British businesses can scale in countries around the world.

We need to celebrate the success of the tech verticals in which London has a globally competitive advantage – AI and machine learning, fintech, retailtech, cyber, SaaS (Software as a Service) and many others. 

The challenge is clear. London tech has never faced a bigger threat than the impact of Brexit on the city’s global reputation. But if we speak with one voice and send a positive message to the global tech community, there is no reason why the next five years won’t be defined by a tech-enabled and empowered economy.

Russ Shaw is founder of Tech London Advocates

Image credit: Negative Space/Pexels

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