Far from being a phenomenon which exists solely within sight of Silicon Roundabout, tech hubs are expanding across the country.
In London alone there are new centres of tech creativity springing up all the time, thriving on the expertise and innovation which drives the city.
From artificial intelligence (AI) to augmented reality, from financial technology (fintech) to fashtech (fashion technology), London plays a part in driving forward every area of this exciting industry.
Similarly, our science sector taps into the research and development taking place in our world-leading universities, a number of which are based in the capital, as well as drawing on the work at other global institutions elsewhere in the UK, such as Oxford and Cambridge.
London is a centre of excellence for a range of scientific and medical fields and experts from around the world who come to the city to learn and develop their own skills.
But the reality is if you speak to anyone working in these fields you’ll find that one single issue looms largest on the horizon, with the potential to threaten future growth – the possibility of a hard, “no-deal” Brexit, in which we cut all legal and economic ties with the European Union (EU) in March 2019.
Worst-case scenario
Amid all the continuing uncertainty about exactly how the UK will leave the EU, the threat to the tech and science industry looks grave, according to research conducted for the mayor of London by Cambridge Econometrics.
The analysis looked at the potential impact of five different Brexit scenarios on London and the whole of the UK and was commissioned by the mayor last year.
A 'no-deal' hard Brexit could lead to a lost decade with significantly lower growth
Theo Blackwell, CDO for London
In London alone, as many as 11,000 expected new jobs in these industries may not be created, while the capital’s economy could be hit to the tune of up to £2bn. As robust and dynamic as this city is, such a blow would have a serious and lasting impact.
However, investors put their money in talented people with good ideas and if those people are no longer setting up shop in London, that investment will follow them elsewhere.
Access to the European market in data – the fuel of innovation – is also at risk if we leave the EU without an agreement in place. The European Commission (EC) estimated the value of the EU data economy at €272bn in 2015, or 2% of EU GDP. This is estimated to rise to €643bn by 2020.
A recent government paper suggested that 43% of all large EU digital companies are started in the UK. On top of that, the UK has the largest internet economy as a percentage of GDP out of all G20 countries.
Also, when you consider that 75% of the UK’s cross-border data flows are with the European Union, you can begin to see the impact that a hard Brexit could have on existing digital tech firms as well as on the potential for missed growth.
Even a scenario in which the UK leaves the European Union with a two-year transitional deal in place and continued membership of the single market, some 36,000 new science and tech jobs may be lost across the country, including 5,000 in London.
Time running out
Time is fast running out for the UK government to secure a good deal from the Brexit negotiations that protects jobs, growth and living standards for future generations.
A final deal has to be agreed by October 2018 at the very latest, so that it can be ratified by all 27 EU member states before the March 2019 deadline for Article 50 – the point at which Britain leaves the EU.
The threat to the tech and science sector should be seen in the wider context of how Brexit could affect the economy as a whole.
Across the UK, a “no-deal” hard Brexit could lead to a lost decade with significantly lower growth, the job market cut by as many as 500,000 posts and nearly £50bn less investment by 2030 than would be the case if we remained in the single market and customs union.
In London, there could be 87,000 fewer jobs and the capital’s economic output could be 2% lower by 2030 than predicted under the status quo. That would mean fewer opportunities for the next generation and poorer living standards than would otherwise be the case – a huge human cost to pay.
Mayor Sadiq Khan shares the belief that an extreme hard Brexit is still a real possibility – the government must be alive to the risks and must do everything it can to mitigate the impact of our exit from the EU.
This thriving sector of the economy should be given the support and investment to continue to flourish, not have its future nobbled. As the mayor has said, in the EU referendum nobody voted for lower growth, fewer jobs and for our economy to take a hit from which it could take years to recover.
Not only could new jobs not be created, not only might our economy suffer a multibillion-pound dent, but London and the UK’s standing as a world leader in scientific and technological innovation could be dealt a serious blow – the repercussions of which could be felt for generations to come.
We owe it to the creative and innovative people working in these fields now – as well as those who will enter the industry in the years and decades to come – to ensure they are given the best possible chance to succeed.
