UK’s EU-beating tech sector set to boom in Brexit Britain

2.9m jobs – and increasing all the time, ‘despite Brexit’

And not only in London, as Manchester is now fastest-growing tech hub in Europe

Brexit Britain is confounding the ‘experts’, with rapid growth in the technology sector as a whole, across the entire country. This area of UK PLC now employs over three times as many people as in the entire automotive industry. Within this sector ‘Fintech’ (financial technology) sector has performed exceptionally well.

Below we present the views of Tom Bohills, the smartest lawyer we know in his field, and the winner of the Law Society’s ‘Sole Practitioner of the Year’ award in 2020. He looks at the whole tech sector as well as the Fintech part of it in more detail.

City United Summary

How the tech sector is booming in Brexit Britain

UK Fintech sector attracted more capital than the next 10 European countries combined
More UK deals completed than in the next top 10 European countries
UK tech isn’t only London – Manchester is now Europe’s fastest-growing tech hub
More investment in UK tech sector than in EU’s top two economies combined
Four times as many $1 billion tech start-ups in London as in Berlin
UK tech start-ups increased by 44% in 2019 – whilst they fell in US and China
UK tech employs over three times as many people as the whole automotive sector

By Tom Bohills, Chronos Law
With charts by Facts4EU.Org

The English language is uniquely blessed with profanities starting with the letter ‘B’. Yet among London’s tech community, few words are dirtier than Brexit. Even now, four years after the vote, the very mention of the word draws a collective grumble from converted warehouses and shared workspaces across the capital.

Despite loud opposition to Brexit, however, the sector is absolutely booming. Take Fintech (financial technology) as an example. Despite the hysteria around the possibility of a No Deal Brexit, the sector attracted a record $4.9 billion in capital in 2019. In fact, UK Fintech attracted more capital and completed more deals than the rest of the top 10 European countries combined.

Brexit Britain is confounding ‘experts’, with rapid growth in technology sector as a whole

Fintech’s success has been reflected across the wider tech sector. Whilst the total amount of capital invested in tech startups in the US and China fell sharply in 2019, in Britain it increased by a record-breaking 44%, exceeding £10bn in the year.

‘Despite Brexit’, Facebook, Apple and Google have set up vast HQs in London while last month Netflix announced plans to triple their existing office space. In 2019, the UK sucked more investment into its tech scene than France and Germany combined.

Britain’s tech industry is not only streets ahead of its EU rivals, but the gap is actually widening. As of January 2020, London had 45 unicorns (start-ups worth at least $1 billion) compared to 10 in its closest continental competitor, Berlin. Taking the UK as a whole it dominates the scene, as the chart below shows.

It isn’t only in London – Manchester has the fastest-growing tech hub in Europe

And this is not just a London-centric phenomenon. The UK has five of the top 20 European cities for tech, with Manchester now the fastest-growing tech hub anywhere in Europe. In 2019 alone it grew by 277%.

Much depends on the Government listening carefully to this sector but, in the medium to long term, Brexit can be a boon for the tech sector.

How the Government can support this fast-growing sector

From 2018 – 2020 the number of employees working in UK tech grew by 40% and the sector now accounts for 9% of the national workforce with 2.93m jobs.

So let’s start with immigration. Every government in recent history has felt the need to keep overall net immigration to politically manageable numbers. Given the open door offered by EU membership, successive governments have instead turned their attention to limiting non-EU migration – given it was seen as the only lever they could pull. This has had the effect of locking out the brightest and best non-Europeans in favour of lower skilled EU migrants in a blunt, one-dimensional numbers game.

Now, the UK can finally start to assess migrants fairly – based purely on skills, not the colour of their passports. The great fear of tech executives was that Brexit would choke off the talent pool, but the opposite is proving to be true. The number of people applying for the Tech Nation visa — which allows individuals to work in the UK’s digital technology sector — has just hit its highest level since 2014. We still have the pick of global talent whilst also having a unique opportunity to promote and nurture more home-grown British developers and data scientists.

Taking back control

Control was a central feature of the Brexit campaign and, as of today, tech businesses have never had more control over the future of their industry. It is easy to forget that Brussels is packed to the rafters with lobbyists. As early as 2014, The Guardian reported that there were over 30,000 paid lobbyists, influencing approximately 75% of all EU legislation. To put that vast figure in context, there are 40 lobbyists for every Member of the European Parliament.

Most of these lobbyists represent old incumbents who are naturally hostile to innovation and competition. With full control over our own regulatory, tax and economic future, the stars of UK tech can feed directly into government policy.

No more murky EU ‘working groups’ packed with lobbyists

No more murky EU working groups, no more horse-trading between member states – the UK’s tech sector can pitch changes to the Government and potentially have them drafted into law within weeks. The pioneers and entrepreneurs of this country’s fastest-growing industry can work with politicians to keep their global edge.

Finally, global trade is changing, and changing fast. Existing EU trade deals have tended to prioritise agriculture, meaning the UK’s service-heavy economy has had to play second fiddle to big continental farming unions. No longer.

The future is right here right now

“In the space of a single year, we have shattered all records, with technology investment in the UK soaring by 44 per cent to over £10 billion – more than France and Germany combined. Britain is second in the world for fintech, with investment rising by over 100 per cent in the last year alone. And we are number one in Europe for the emerging technologies that will transform the lives of every single human being.”
– The Prime Minister, Foreward to the Tech Nation report 2020

The recent UK-Japan trade deal incorporated the most comprehensive digital chapter in any free trade agreement on earth – streamlining regulatory processes, encouraging data flows and building in robust protections for our creative industry. We are now cutting the deals and making the rules that the rest of the world will follow.

Brexit will have bumps for all sectors but tech is uniquely placed to drive forward the free-wheeling, entrepreneurial global Britain we know this country can be.

By Tom Bohills, Chronos Law