With London and Brussels agreeing on an 11-month transition period from the end of January 2020, the real impact of Brexit has begun. Leaving the European Union will have unprecedented effects on the UK economy. Some for the better others will be more challenging to resolve rapidly. How, then, will this impact the UKs Tech sector?
What Are The Impacts of Brexit
There have been plenty of sharp turns in the negotiations between Boris Johnson's government and the EU. However, as we are near a new economic landscape for the UK, there has been a relatively optimistic view of the Tech sector's outcome. But before we present the excellent news let's look at the main point of pain for the Tech sector.
One major issue for tech businesses over Brexit is the transfer of personal data between the UK and EU, which is no longer allowed by default. During the 11-month transition period, the UK was appraised to see its national data protection laws offered the same degree of protection to the EU's. Although still to be resolved, if they are deemed satisfactory, personal data can continue to be transferred without additional steps to comply with EU laws/jurisdictions such as the UK GDPR or the EU GDPR. However, if the UK does not meet the EU's standards, it will be like any other country outside the European Union, which has not achieved adequacy status. Organisations in the EU looking to transfer personal data to the UK will need to implement a data transfer mechanism before making the transfer and comply with the additional requirements set out in the Schrems II judgement.
Economic Optimism in the Time of Brexit
While this is a worry, the overall impact that most economic analysts have for the UK's tech sector is generally optimistic. Experts are even expecting a tech boom. It comes as no surprise considering that the UK's tech investment rose while they fell in China and the US. In fact, the figures showed a 44% increase in investment in Britain in 2019 at an impressive £10 billion.
Alongside this, there is also an essential aspect of non-EU investment and cooperation to consider. While leaving the EU, will undoubtedly complicate matters on the overall economic landscape, there are newer, more diverse investment and trade opportunities now open to the UK. For example, the recent UK-Japan trade deal incorporated the most comprehensive digital chapter in any free trade agreement. This deal managed to include streamlining regulatory processes, encouraging data flows, and building robust protections for our creative industry.
The current agreement also allows for a continued approach to support the telecoms market. Both UK and EU providers have access to one another's networks and do not need to wait for authorisation before delivering/providing services. This is especially important for the new 5G scenery, although there has been no end to the Huawei fiasco controversy. Nevertheless, this is a tremendous level of access that exceeds formal free trade agreements. Additional information for telecoms and information services providers can be found in the full UK-EU TCA.
Cyber security is another sub-sector in tech that will have a positive if not natural outcome following Brexit. The UK-EU agreement allows for continued cooperation in the field of cyber security as well as the UK's participation in the activities of organisations such as the European Union Agency for Cybersecurity (ENISA) and the Network and Information Systems (NIS) Cooperation Group as well as voluntary cooperation with the EU's Computer Emergency Response Team (CERT-EU).
The Post-Brexit UK Tech Market
Combining these results with the highly innovative and dedicated workforce that the UK has, it's no surprise that optimism is widespread for a bright future in UK tech. What's more, within the sector, financial technology has also increased rapidly in the country with more capital and deals completed than the top 10 EU countries combined. The amalgamation of these facts gives way to optimistic forecast the UK economy. While there is no doubt a need for caution and additional scrutiny with how the impacts of the EU-UK agreements unfold, the future will be one where the entrepreneurial UK can spread its economic wings for more remarkable growth.