How will Brexit affect the IT industry in London?

The UK’s IT industry was overwhelmingly in favour of remaining in the EU. However, despite the tech sector being so vocal in its support for staying in the European Union – and despite all the widespread concerns – the signs are that much of the doom and gloom that existed around predictions about how Brexit might affect the IT industry may yet prove to be unfounded.

Initially, in wake of the referendum result, the industry could even said to be thriving in terms of expansion and investment. So, almost 18 months on, is the picture of how Brexit will affect the IT industry any clearer?

Can London still be the next Silicon Valley?

Although East London’s Silicon Roundabout is far from being as iconic and important as Silicon Valley, it is at least a symbol for the UK tech and IT industry. Prior to Brexit, London was one of several major European cities vying to become the European equivalent of Silicon Valley – but the likes of Paris, Lisbon and Berlin all have the credentials to rival London.

Many wondered and worried if the ‘Leave’ vote essentially meant that London would be passing the baton to one of its continental rivals. The evidence of the last year suggests that London needn’t have worried. Giant names, Amazon and Apple, have both announced major UK investment, as have the likes of Facebook, Google and Microsoft.

Another thing that could help the UK and London in particular is the fact that large companies like Apple, Facebook and Google have all fallen foul of the European Commission recently. Generally, the UK has remained obliging and attractive as a place to invest.
Of course, London needs to remain mindful that everything does not just revolve around IT. The wider picture is all about services in general. The reason a city becomes a global magnet is its ability to offer a wealth of all the specialist skills that a large business might need to call on, from bankers to lawyers to accountants and IT people. A city that suddenly becomes unwelcoming to immigrants will lose much of its multiracial appeal – it will also lose a multitude of skills from all over the world.

The way that London is perceived from the outside will be extremely important over the coming years.

The talent shortage threat

Another threat post-Brexit to the IT industry in London is the tech talent shortage. The sector has been reliant on sourcing foreign talent from the EU and other territories around the world. Fears that this would become increasingly difficult for companies to do following Brexit abound – but again the early evidence suggests otherwise. The number of tech visas granted by the Home Office in 2016 actually rose by 20%.

Other challenges lie ahead for the IT industry in London. Not only does the city need to remain attractive to companies, investment needs to pick up after a slowdown in 2016. Ultimately, however, excellent ideas are likely to remain to be the key driver of investment – so if solid ideas continue, Brexit in itself should not really affect the future.

Regulation could create barriers for the UK sector too. The EU’s Digital Single Market initiative aims to allow free movement of people and capital in the tech environment. If the UK industry were to lose access to this, the ability for UK companies to work seamlessly across the continent would be lost too.

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