Tech businesses eye Brexit victory

The world, according to Gerd Leonhard, is about to be reimagined. The author, futurist and digital entrepreneur predicts that mankind will change more significantly in the next 20 years than it did in the last 300.

‘Technology changes us as human beings,’ he told Mercedes-Benz. ‘Automation, robotisation, virtualisation – all these things happen at the same time and in an exponential development. And they will bring along bigger changes than we can estimate today.’

Leonhard is not alone. Positivity about the influence of technology on the world elongates the argument that this is not a bubble. It’s a revolution. And it’s infiltrating every aspect of our lives. The way we travel, interact, learn and work will be transformed. 

This self-assurance is helping TMT businesses maintain a relaxed attitude towards the UK’s decision to exit the EU. Many see it as a glitch rather than a fundamental problem that will undermine their trajectory. 

RSM’s Brexit Monitor shows decision makers operating in the TMT sector are more positive than not about their company’s prospects over the next five years – sentiment currently stands at 122 on a scale of 0 to 200 (in which any reading above 100 shows that businesses are more optimistic than pessimistic).

So far, post-referendum fears about a talent drain and competition from European cities haven’t materialised. Instead, tech giants Apple, Google and Facebook have pledged allegiance to the UK – in the weeks after the referendum, all announced plans to build multi-million-dollar headquarters in the capital. 

While businesses should carefully watch foreign talent pipelines, it’s likely that the UK will always be a honey pot for fast-growing tech businesses. The people who power this sector are young, dynamic and ambitious. It follows that they want to work in young, dynamic and ambitious places. Cities like London and Manchester tick all the right boxes. 

The UK’s geographical location is also a trump card. If you’re a managing director in East Coast America, Asian markets have closed by the time you wake up. It’s much easier to manage your fast-growing international business from London. This will still be the case in a post-Brexit world. 

The UK is also a major financial centre. While some banks threaten to move their HQs to Europe, the big PE houses will continue to call London home. Businesses will still be able to tap into a mature financial services sector. Capital flows and deal volumes are buoyant. If you’re a fast-growing tech business, you’ll have no problem accessing the investment you need. 

Let’s for a minute imagine a doomsday scenario. What would happen if all trading benefits with the EU get wiped out, and we’re no longer in a tariff-free zone? What would this mean? The reality is that little would change for tech businesses. 

Sure, products might cost a little more. But if your technology is superior, people will pay for it. PE cash will still be around. Investors will still invest. Yes, you might have to chase a bit harder for talent, but a large pool of skilled workers will still be available. 

While tech businesses are not impervious to Brexit, they are in a uniquely strong position. Untethered to bricks and mortar and traditional business performance indicators, such as profitability, fast-growing tech companies are innately agile. Innovation and adaptability is in their blueprint. This is the key to navigating short-term volatility.