A Magister Advisors poll of the fastest-growing UK tech companies suggests half the key talent on average is British, 30% EU and 20% further afield. So Brexit’s uncertainty now demands half the UK’s best tech talent to rethink if they want to, or can, stay and perform.
Same for their fast growing employers. On June 23rd the board of a 700-person software company met to decide where to add 100 engineers in Europe. First choice was London, but if Brexit happened, they would opt for Germany. On June 24th 100 highly-skilled tech jobs silently and irreparably left the UK’s fastest growing sector. A UK fin-tech company had to decide during August whether to expand its Dublin or London operations. The board voted unanimously; the company had to become Brexit-proof, so dozens of jobs shifted without fanfare to Dublin.
We wish these were just examples to make a point, but they are not. These are real decisions taken by experienced boards. Now across UK tech this is repeating weekly. Jobs that would automatically be created in the UK are on hold, or worse, permanently shifting abroad. A few start-ups have already relocated, and the Berlin government has commissioned a bus to drive around London promoting Berlin as a cheaper tech base guaranteed to remain in Europe.
The reason for all this isn’t Brexit itself; no one can guess what it will actually mean, or how negative its implications. The silent killer is the uncertainty Brexit now forces fast-growth companies to confront. Look at it from the perspective of a company doubling in size every year, the winners everyone wants to encourage. Their CEOs face so many critical decisions, and so much risk already, the last thing they need is basic regulatory and economic uncertainty. De-risking inevitably means fewer jobs, and less investment, in their UK activities.
While the UK government is admirably working at government warp-speed, unfortunately tech moves 100x faster. An incalculable number of jobs, and future growth, will have shifted elsewhere in Europe by the time Article 50 is triggered, and unless there is unprecedented clarity upfront about what Brexit will actually look like, the best tech companies will have to assume the worst and act accordingly.
Assuming the worst means planning based on a high chance of immigration brakes choking the supply of talented European or other candidates. It also means assuming some form of restriction or cost associated with exporting to Europe. Factor in a slower-growing UK economy. Finally, it means investors starting to look at UK tech companies as national rather than European, which could drive down funding valuations and reverse the gains of the last decade.
If this sounds like a “Remain” polemic, it isn’t. Brexit may well work out, and the UK government may cut a departure deal, at least in principle, at warp speed. Brexit may even mean economic growth from direct relationships beyond the EU.
But uncertainty is corrosive: Japan’s recent message to the UK and EU (http://bit.ly/2cz8TQZ) was a plea for a transparent, predictable process and outcome Even six months of uncertainty could mean thousands of the very best jobs being created elsewhere in Europe. A year or two of uncertainty could unravel the last decade of government effort to nurture a world-class tech ecosystem around the London area.
From a tech industry perspective, there can be no Brexit benefit remotely worth this incalculable risk, and cost, to the industry as a whole. The lines at UK Border Control are like critical lines of software code. Post-Brexit much of that code could be deleted.
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