There has been a lot of conjecture regarding the impact Brexit would have on the ability of the UK to perform on an international stage.
Indeed, there have been arguments, from both sides of the debate, suggesting efficiencies could be increased/decreased depending on your point of view.
However, what does the data tell us about the current situation and how it would be affected by Brexit?
- In 2014 $1.4b (US) was invested in digital tech focused businesses in London alone.
- In 2014 $234b (US) was the estimated turnover of digital tech businesses in the UK.
- According to research by Oxford Economics $17.5b (US) will be invested in London alone from 2015 to 2025.
- In Jan 2015 17 ‘Tech’ Unicorns (Pre IPO businesses worth more than $1b US) were based in the UK. 13 are based in London. These 13 total more than the overall total of Germany and Sweden, which are considered to be international hubs, for these sort of businesses.
- In Jan 2015, 251,590 were employed in Inner London in ‘tech driven’ businesses and from 2015 to 2025 a further 46,000 jobs in tech are expected to arise.
- London is the Fintech capital of the world with 44,000 employees.
- There are a further 54,000 workers in Big Data in London, compared to 57,000 in New York and 98,000 in San Francisco.
- UK Digital tech is growing 32% faster than the rest of the UK economy.
- 41% of digital skills exist outside of the traditional Digital Tech Economy, such as the Public Sector and Financial Services.
- Tech Nation suggested there are 1.46m employed in the UK by digital businesses. This is set to increase by 5.4% by 2020.
- Startup activity in ‘digital tech’ created 20, 000 new jobs in 2015 alone.
- UK has one of the best Talent Pools on the Planet with 4 of the world’s top 6 tech driven universities.
All the numbers suggest the UK is competing well in terms of the future economy and providing platforms for digital tech focused business to grow and compete well for Talent against their European counterparts.
But what reliance does this projected growth in the UK have on EU citizens originally from out with the UK?
- 2.1m EU Immigrants work in the UK. 11% of the NHS workforce is not British. However, when we consider digital tech this can rise to 20% and up to as high as 35% if we concentrate on ‘tech’ driven roles only.
- It was estimated by the University College London in 2010 and 2011 that European migrants across the UK contributed $29b (US) NET to the UKs Public finances.
- It is estimated 75, 000 EU nationals, are employed in digital tech across the UK.
At this juncture, I am keen to highlight an important point. In the digital tech space, ideas and delivery of those ideas, from a technical standpoint, are what differentiate businesses and their offerings.
As a consequence, it is clear to me that the competitive advantage of the UK and in particular, London, at the moment is the ability to take advantage of the free movement of people and skills from across the EU.
The UK is well positioned currently as a country in the War for Talent.
With up to a 3rd of the tech driven skills within this sector coming from out with the UK and from other areas of the EU, there is a clear reliance between skills from other members of the EU and the fantastic performance of this component of the UK economy. Indeed, it is also estimated that approx. 48% of the revenues from these businesses are also coming from out with the UK. As internationally focused businesses, the ability to scale across borders is key to their success.
So, what impact could Brexit have on the ability of the UK to compete?
- Restricted ability to hire the skills required to grow their business quickly and efficiently as the talent pool will be substantially smaller. A lessened position in the War for Talent.
- More Red tape and time lost when a hire is to be made.
- Possible loss of over a third of your current tech driven workforce.
- Loss of continued VC investment to more talent driven hubs like Berlin, Paris or Stockholm.
- A negative impact on the fastest growing component of the UK economy immediately.
- Less intake to the UK universities because of the inability to secure a job after study.
Overall, it impacts massively the ability to compete for the top talent on the market. This is one of the key elements of a tech driven business to find competitive advantage.
Does the UK really want to risk one of the key elements of growth that has been established post credit crunch?
What do you think?
This was written by Martin Collins, the Founder & MD of Red Executive