I went on Channel 4 News last night to talk about the future of tech companies in a post-Brexit Britain. The premise of the piece was that Brexit was bad for our tech companies and that as a result they were all more than likely to up sticks and move to Berlin – leaving what is now London’s Silicon Roundabout to return to being the Old Street wasteland it was when MoneyWeek’s cheap offices were located there a decade ago.
My job on the news was to have a go at explaining why this might not happen. But the question should, of course have been the other way around. Not why on earth would it not happen, but why on earth would it happen?
Let’s think about why tech firms came to the UK in the first place. Most will tell you that it is about language (if you have lots of different nationalities working for you, you need a common language that works for the most possible people); the services infrastructure (legal and financial); the clustering effect (its great to be with other businesses similar to yours – this is a legacy of UK success); the light touch regulation (the UK has been very supportive of fintech, for example, and the SEIS and tax credits for R&D schemes are popular); the ease of hiring and firing; the friendly tax environment; and of course the access to high-quality international employees.
Brexit doesn’t change any of these things. The only one that it could change is the last (access to a wide range of quality employees). But even the most intense of immigration control advocates never mentioned barring high quality employees from entering the UK – and of course there is already a system in place for hiring foreign workers via the Tech City Initiative.
That’s not quite the same as fully free movement of labour. But we can put in place faster, better, wider systems that allow tech workers to come from the EU and the rest of the world if it turns out that free movement within the EU goes with Brexit.
Finally, it is worth noting that the UK’s tech firms won’t be leaving a single market in the same way as, say, our car manufacturers. While there are hopes that there will one day be a coherent digital single market in the EU, there isn’t one yet (there are 28 separate ones with 28 separate sets of contract law).
Some companies will start up in Berlin or Copenhagen rather than in the UK as those cities double their efforts to attract them, and some will be tempted to deal with any uncertainty they feel by moving (though as all small company owners will know, moving is an uncertain business in itself).
But given why most came in the first place, it is hard (once you have removed the emotional response to Brexit) to see why they would leave now.
PS If anything is going to destroy London’s tech industry it is much more likely to be house prices than Brexit. Take out international migrants, and 66,000 people in their 30s left London in 2015. “We are seeing a major migration of London’s housing wealth” says Lucian Cook of Savills.