Should Ireland be a tax haven for IT corporations? Is Brexit threatening the digital economy? Can social media companies help in fighting terrorism? This series, presented in cooperation with our media partner, euro | topics, takes a closer look at the debate on digital economy and society taking place in Ireland and all over Europe. Until #rpDUB arrives, we are regularly featuring euro | topics guest articles on current topics here on the re:publica website.
Even today, the United Kingdom is the powerhouse of the digital and start-up economy in the EU. Ten percent of the UK's gross domestic product is generated in the technology sector, and about a third of all venture capital invested across the EU is accrued to the United Kingdom. The UK is top of the list when it comes to founding new start-ups and enterprises, and home to more than 40 percent of the “unicorn” tech companies in Europe: start-ups valued at one billion US dollars or more.
However, this success has been closely linked to the advantages of the European Single Market, with its free movement of goods, capital, services and labour. So it is hardly surprising that the overwhelming majority of entrepreneurs in tech – 87 percent – voted for Remain, according to a survey conducted by The Guardian.
Uncertainty After the Brexit Vote
Most companies are not expecting any immediate problems from the Brexit vote, but one aspect is at least causing discomfort: the uncertainty. Prime Minister Theresa May recently did announce a time frame for the withdrawal negotiations, but how the departure from the EU will ultimately be accomplished, and which conditions have to be met for that to happen, is still completely unclear. The whole idea that the Brexit will not cost anything, and that the benefits of EU membership can be preserved, is false, writes the Times.
For an internationalized sector like the tech industry, the question as to whether Britain is still the place to be should be permitted, post-Brexit. Just days after the Leave vote was announced on June 23 this year, the first CEOs publicly started thinking about possible new locations for their enterprises. Others said they would put their expansion plans abroad on hold. Particularly if the Brexit were to restrict the right of abode, local companies might have problems finding international specialists. And entrepreneurs might well just choose other places in future to realize their ideas. Today, about half of the founders of Britain's top tech start-ups are not British citizens.
Worries About Europe
This could benefit other locations in EU member states, such as Berlin, London's strongest competitor in all things start-up. But Frankfurt, Amsterdam, or Dublin are also likely candidates. So will the Brexit at least be advantageous for the rest of the European Union? Not necessarily, says Tufts University scholar, Bhaskar Chakravorti. He is concerned about Europe as a business location in general.
Europe's digital economy, something of a Sleeping Beauty by international standards anyway, could lose even more of its momentum when Great Britain finally leaves. And Europe would have even more trouble keeping up with the stiff competition from Asia and the US.
But of course, the digital industry also lives off its expedient optimism, and so Gerard Grech, CEO of Tech City UK, recently published an ardent plea for thinking positive – in spite of the Brexit, or maybe just because of it.
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