Technology

The UK is a world leading digital economy, and the UK technology sector is an exciting mix of home-grown entrepreneurial talent and international businesses helping put the UK at the top of several key indicators. The UK is number one in the world when it comes to e-commerce [1] , and the World Economic Forum places us at 5th in the world when it comes to the availability of technology [2] .The London technology scene is internationally recognised, with tech hubs flourishing all around the country from Newcastle down to Bristol.All of this means that our tech businesses are largely pragmatic and opportunity focussed in the wake of the EU referendum result – as long as the government can negotiate to overcome some of the economic challenges that could arise as part of our departure.

Key stats

  • 1.2 million employees
  • £95.5 billion GVA (5.7% of total GVA)
  • £20.8 billion exports
  • £29.0 billion imports
EU Trade: Barrier-free access to the EU is important for a global industry like technology

The nature of technology and online businesses means that economic activity is virtually borderless, with smaller businesses in particular benefitting from the ability to more easily access the EU's 500million consumers. Losing access – virtual or otherwise – to our biggest trading partner and consumer base should be avoided so that our tech sector can continue to thrive.

Working toward a digital single market in Europe – and the possible £1.7billion reward its completion could bring to our capital by 2030 [3] – has been a sought after prize for the tech sector in recent years and we should continue to exercise influence to shape it, as well as seeking to access it upon leaving the EU.

Regulation: In the short-term, technology businesses are seeking regulatory stability and certainty

There are a number of areas of EU law that will continue to be important to the UK technology sector after we leave the EU, one of the most prominent of which is data protection. In an increasingly interconnected world, data is at the heart of doing business.

The UK is a world-leader in promoting data-enabled innovation across all sectors, not just technology. In order to have a thriving tech sector and pioneering digital economy, we need a robust, internationally recognised data protection framework that allows us to trade and process EU data.

Migration: A flexible, open immigration system is important for growth in technology

Digital and technical skills are critical to all sectors, especially the technology sector. These skills are often in short supply, and as such competition for them is great, with salaries for 'digital' jobs averaging at around £50,000 [4] – much more than the national average salary.

Out of necessity, tech businesses look for these skills abroad, with some businesses employing as many as 70% non UK nationals, as well as deploying lots of UK staff to the EU and beyond. Access to priority skills, and the ability to deploy them elsewhere freely, will be important for the technology sector and the wider digital economy.

International: International relationships supported by the EU are important to preserve

At present, UK technology companies are also able to transfer data safely and easily between the UK and the US, and several other international countries, as a result of EU agreements.

It will be important to preserve these arrangements in new forms. Prioritisation of this can play an important role in supporting the UK's reputation as a global technology hub.

Exit: A smooth exit is needed to ensure regulatory certainty in the technology sector

There are numerous regulatory cliff edges that the technology sector faces if the UK leaves the EU without any deal or interim arrangement. While some uncertainty could be mitigated by direct coping of EU rules before exit, the UK needs to provide clarity on key regulatory issues going forward. Business critical issues such as data protection require the UK government to secure an adequacy decision from the EU, a process that the UK government needs to initiate as soon as possible. For the UK to remain a leading digital economy, a smooth exit is required and this mean identifying regulatory cliff edges and solving them through comprehensive UK-EU arrangements or interim deals.

Our members say

"Almost every business and person in the UK has enjoyed the benefits that rapid communication and access to information have brought. We must ensure that we stay part of European and global digital communities to be relevant on the world stage." - cloud technology firm

"Digital trade is crucial to the UK being a globally competitive economy. Clarity and international compatibility of key regulatory issues, such as the future of the UK data protection framework, are essential for business confidence and investment." - multinational technology company

"Access to highly skilled people, particularly engineers, is the lifeblood and the major obstacle to progress of our business. We need a clear strategy from government that the UK is open for business and will remain a leading tech hub in the world." - international communications equipment business
Our partners have more information:
  • Association of British Insurers
  • techUK
  • UKIE

For technology at the CBI, contact: Roxanne Morison on 0207 395 8043 or Roxanne.Morison@cbi.org.uk


References

[1] eMarketer, September 2015

[2] World Economic Forum, The Global Competitiveness Report 2015-2016

[3] London First, Jobs and Growth for London

[4] Tech City/Nesta, Tech Nation 2016

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