Looking at the immediate and longer term prospects for
US tech businesses operating in the UK, it's very much a tale
of two halves - right now where all the talent and opportunity is
still exactly the same but coupled with a cheap pound and, at the
end of the Brexit negotiations, whenever that may be.
As things stand, despite all the prevailing uncertainty caused
by the Brexit vote, nothing has actually changed from a regulatory
perspective and with a falling pound, London continues to be a
highly attractive and indeed cheaper prospect for ambitious
start-ups, the giants of the tech world and the investment
community. The sector of course thrives on immediacy so it's
unsurprising US companies don't appear massively fazed by the
prospect of a two-year Brexit negotiation period, though that could
of course change if a deal isn't done before 2020 as is
currently envisaged. And some of the tech giants are signaling
their faith in the UK tech economy by upscaling their presence -
for example Google and Facebook's investment in premises and
people in London in the last couple of months.
While a notable number of firms in advance of the Brexit vote
indicated their willingness to relocate from the UK or indeed
bypass it altogether, the fact remains that London is still the
place to be for tech as one of only a handful of truly global
cities. While much has been made of the likes of Frankfurt or
Berlin taking up the tech mantle in the event of a hard Brexit, as
things stand these locations simply aren't geared up to compete
with London's offer - and won't be for many years to
This shows in current day to day activity. Anecdotally, we are
seeing a number of US tech clients who already have existing London
operations actively looking to scale up in the near future. This
positivity is also reflected in M&A activity across the space,
which has remained buoyant since the Brexit vote, with US companies
continuing to see significant value and opportunities in UK-based
tech operations. Little wonder then that the UK's digital tech
economy is now growing some 32% faster than the wider UK economy,
according to industry body, Tech City UK.
The research further indicates some 43% of US firms envisage
needing extra technical support to make Brexit a success.
That's a huge opportunity and ultimately one the UK is
eminently geared up to grasp with both hands in terms of talent,
infrastructure and opportunity. Indeed, further research from Tech
City UK indicates the sector will create an extra 46,000 tech jobs
in London alone by 2024.
Looking further down the line, far greater uncertainties persist
that are of increasing concern. As a truly international sector,
technology companies thrive on the availability of a rich and
highly mobile talent base so any trend towards restrictions on the
free movement of people, both within and outside the UK and EU will
be keenly felt. Likewise, concern over greater protectionism in the
US itself is also ringing alarm bells, as are prospects for the
Trans-Pacific Partnership (TTP) following President Elect
Trump's recent pronouncements that he will move to scrap
For now though, despite all the ongoing uncertainties around
what Brexit might mean in practice, it's very much a case of
business as usual for US companies active in London's thriving
The following graphs highlight how US businesses with a turnover
of $13 million or above are already reacting and preparing for
Do you think the delay of up to two years (or possibly longer)
for the UK to negotiate an exit from the EU will have a negative
impact on your business?
Is uncertainty about the future regulatory environment affecting
decisions you are making about trade and investment with the UK
If you have a base in the UK, are you considering moving it to
elsewhere in the EU as a result of Brexit?
Are you more likely to bypass the UK in order to do business
with the rest of the EU as a result of the Brexit vote?
Would you favour a direct trade deal between the US and the
Other than a change to tariffs, what factors would encourage you
to continue trading and/or investing/providing services into the UK
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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