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Edison Hill

The EU referendum and the IT sector…

The EU is by far the UK’s biggest trading partner. 44% of everything we sell abroad goes to EU countries.

Remaining within the EU guarantees our access to the single market but leaving creates both risk and opportunity.

So how will leaving or staying in affect the UK IT sector? It’s a question generating a great deal of debate throughout the industry.

Those that back the campaign to remain part of Europe have a sound argument.

The UK relies on a large pool of talent sourced from Europe and backers of the stay campaign argue that, if leaving Europe makes it more difficult for Europeans to work in the UK, IT will suffer as we have a shortage of skilled IT workers in our own country.

One of the most influential arguments of those who want us to stay is that we currently, as part of Europe, have access to a market of 500 million people.

They claim that EU membership makes the UK appear more attractive to international investment and also makes the UK more globally competitive, giving our nation a better deal in trading relations as part of the EU. It is also argued that more foreign businesses are likely to set up in the UK if we are part of the EU.

There is also a line of thought that the UK remaining part of Europe gives us a seat at the table where the decisions are made, whereas, if we leave, it is likely that we will still be affected by these decisions but will no longer have any say in how decisions are taken.

In order for a separate UK to remain trading with the rest of the EU, it is likely that many compromises would have to be made, for example in immigration.

But not everyone agrees.

There are many in the industry who think that a UK outside of Europe would flourish. For a start, our native talent would have more opportunities for work, training and development. If even a fraction of the 350m we spend each week on staying part of the EU, was to be invested in training and education, our home-grown talent could easily flourish. Perhaps this would outweigh the argument from those who point to a wider talent pool as the No. 1 reason to stay.

To build on that argument, many say that it is the uncontrolled immigration from the EU that is actually stifling our access to talent. In reality, it is India and the Philippines where you find highly skilled, but cost-effective IT professionals. However, due to the lack of control we have over immigration from the EU, the government has to be very strict with immigration from other countries, meaning accessing these true talent pools is almost impossible.

One of the main reasons that some of the key thinkers in our country want us out of Europe is that they want the UK run by people who have been elected by the UK people, they want our rules made by us.

It is thought by this camp that the UK does not have enough influence in the EU and there is far too much regulation and red tape stifling trade and business. Only last year, the EU changed the VAT rules for those selling digital products and services, which ultimately meant that small businesses who had never had to even register for VAT before, now had to register and start charging and paying hefty fees. It was financial chaos.

Lastly, those that argue for Brexit believe that remaining part of the EU is only beneficial for big business. SME’s on the other hand, who are currently smothered by EU regulations, would actually flourish in an independent UK, growing a stronger economy within our own control and regulations. Big companies such as Facebook and Amazon love the EU. But why? Could it be the ability to play the EU rules to massively save on tax? Take for example the €9tn that flows though the Netherlands to tax havens, which helps huge corporations pay less tax than some small family-owned IT firms in the UK.

The problem really is that there is still a lot of uncertainty in actually what will happen if we leave the EU.

Will existing EU laws still apply? Many European laws are later entrenched into UK law but not always and not right away. Will, for example, the new data protection laws that come in later this year still apply? Another example is that the EU have made rulings about how Microsoft have to bundle software for sale in Europe – will this no longer apply?

Under EU law, all council data has to be transported, stored and processed within Europe only. Will this still apply or will it have to stay in the UK only? Will UK companies that currently handle European data no longer be eligible to store or process this data?

There are also pricing implications. Mobile call costs are currently low across Europe – will these caps have to go up in the UK?

There’s also the question of EU grants and subsidies within the IT industry. How will these be affected? What about copyright and intellectual property law?

The list of unknowns is long and daunting, that’s for sure. The arguments from both sides rage on and have divided the UK IT industry. There are those who are convinced that leaving would be disastrous and those convinced that staying would be equally so in the long term.

You can be sure to see much more discussion on this subject as the referendum looms nearer. As for us, like so many people we’re still undecided. So we’ll continue to read both arguments with interest as we try to make up our mind on this monumentally important and historically crucial decision.

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