The last few months have proven to be difficult for many governments around the world, with a series of significant changes having taken place, one of those being the United Kingdom’s declaration that they will be succeeding from the European Union.
While it came as quite a shock, the time has come for both the UK and the EU to accommodate the series of changes that will inevitably take place now that Article 50 has officially been triggered.
Brexit has not only sparked various concerns regarding the stability of the European Union but has also raised concerns regarding how this move will affect global industry, specifically tech and entrepreneurship. With London positioned as one of the world’s top financial sectors, many people have been left wondering, how could Brexit affect the global tech sector?
1. There could be significant job loss
There’s already talk of companies moving their headquarters from the UK to other European countries. In fact, some have already started the process. While businesses move headquarters often and for various reasons, those motivated to leave because of Brexit will, unfortunately, also be taking jobs and opportunities with them. So far, the have been discussions regarding post-Brexit deals that will ease potential job losses, but at the moment it’s still very much up in the air.
2. It could limit professional opportunities collaboration
One of the major benefits of being a part of the European Union was the ability for the UK to be a part of an international community that aimed to promote cross-border collaborations. These professional relationships were hugely beneficial to the UK, as London currently one of Europe’s leading startup capitals.
Both an initiator of a plethora of projects, the city also provided much-needed funding to startup ecosystems around Europe that don’t have access to as much financial or professional resources. This not only means that the UK will most likely witness a shrinking talent pool in their own countries, but will have little to no opportunity to reap the benefits of the new businesses created through the EU in the future.
3. It could deter talent
One of the European Union’s oldest and most celebrated cross-cultural initiatives, Erasmus, is a prime example of the importance of working together. Since 1990, the program has allowed thousands of young Europeans abroad, giving them the chance to learn from one another culturally, with the hopes of a more unified Europe.
In 2014 the program launched Erasmus Plus, which following the same guidelines the original premise, but with a focus on European entrepreneurship. Open to young professionals, students, as well as grassroots initiative, the program is a major player in promoting cross collaboration, which can lead to fruitful professional partnerships and business opportunities throughout the EU.
As the UK is a major player in global industry, the UK has the highest number of students in the European Union, which is not only good for the economy but also a major talent resource. Now that the UK is slowly making its way out of Europe, that talent pool might very well shrink, which is sure to have long lasting effects if it does.
4. It could hinder innovation
Currently, over 8,000 companies based in Europe and around 5,500 based in the UK benefit from “Passporting,” a term used to describe seamless trade amongst EU members. Leaving the single market now threatens more red tape and various obstacles to be set in place, which will most likely deter growing enterprises.
Rather than take their business to the UK, tech companies will most likely set themselves up in a startup ecosystem that offers incentives so they can focus on what’s important, growing their company, rather than dealing with legal issues.
While Brexit has understandably left a lot of people concerned for the future health of the UK economy, it’s not all doom and gloom. It will still take time for the UK and the EU to come to a mutually beneficial agreement, which will hopefully pay close attention to benefitting (word) growing global tech sector, rather than harming it.
Michael Volkmann is an entrepreneur with a focus on business operations and finance. He has worked with many small businesses helping them with their M&A for over 6 years. You may sometimes catch him on Twitter.
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