Don’t let Brexit wreck the lead the UK has in Tech
Technology has an outsized impact on every aspect of our lives. Today Google is already Britain’s largest media company earning more here than ITV or any newspaper group. Amazon is one of our most influential retailers — often beating out long-established names on Black Friday and at Christmas. Meanwhile Facebook, if the pundits are to be believed, had more impact on the election than our traditional media sources, awakening a youth vote that had not mobilised before. If we want to maintain global influence, having home-grown technology giants will be key.
Today, we and the rest of Europe are behind. Five of the ten largest companies in the United States are technology companies. In Britain, that number is just one. There is nothing wrong with the banking, pharmaceutical, and tobacco giants that make up our top ten — a diverse corporate base is a hallmark of a strong economy — but there is no doubt that we index lower in technology today than we should if we are to benefit from its future trajectory.
The challenge is that technology giants start small. Building them requires two steps: first, attracting the smart and ambitious who have the drive and ability to start these ventures and, second, creating an environment around them that supports and facilitates those endeavours.
Data shows that talent is globally distributed — over 50% of billion dollar start-ups in the US were started by immigrants (including iconic companies like Google, Tesla, eBay and Apple) — and outside the US, and compared to the rest of the world, Britain has done well at attracting it. Research my firm conducted last year suggested 40% of technology start-up founders in London were foreign-born or educated. This should not be a surprise. We have a long history as an outward-facing, welcoming, multicultural society, boosted by a language that almost everyone speaks. The ecosystem Britain offers to support these key individuals is also strong — we have the largest pool of home-grown and foreign engineers of any EU nation and we attract vastly more global investment.
All of this changed with Brexit. Regardless of intention, the referendum result sent a clear message to many that Britain no longer welcomes them. Some in government appear to believe that this is just a matter of legislative detail — that with the right points-system we can continue to benefit from an influx of talent. But immigration is about people and people think with their hearts as much as their minds. Loose talk of dropping EU citizens’ rights and attacking the very concept of a global citizen may play well in certain circles, but runs the risk of damaging our brand as an international magnet for talent. I see this in the technology companies I work with — the promising engineer who was progressing through interview rounds suddenly drops out because she or her spouse now feels the UK would not be a welcoming home for their family. The universities are affected too — Cambridge reported a dramatic drop in the number of EU undergraduate applicants and recent action from the Russell Group shows that our other leading institutions are concerned they’re already losing ground in the war for talent. These people are desirable the world over, if we don’t make our country an exciting, welcoming destination for them, they’ll go elsewhere and we will be the poorer for it.
Meanwhile our government appears disengaged. This is perhaps understandable given the broader Brexit challenge but previous governments from both sides of the political divide have been fierce supporters of the technology industry and the softening support is palpable. Gordon Brown doubling down on technology infrastructure after the 2008 crisis, David Cameron’s championing of a nation-wide Tech City and Vince Cable’s British Business Bank were all important drivers. In contrast, the only real effort on the innovation front today is a commitment that our R&D investment will match the average of other OECD countries by the end of the next ten years. There is nothing aspirational about being average in a decade.
Instead we should capitalize on our strengths in education — remove students from immigration quotas and enable them to stay and contribute to our society and economy, rather than kicking them out just when we’ve equipped them with world-class knowledge. And we should focus industrial strategy on a high-tech sector where we enjoy an unfair advantage–how about doubling down on genomics and the NHS rather than cutting costs and selling our data to private companies?
In 2012, the UK attracted $1.2B of global investment into its technology start-ups — twice that of Germany and almost three times that of France. The good news is that in 2016 that number grew to $3.2B. The bad news is the others have caught up — Germany enjoyed $2.2B of investment, France is almost par at $3B. We still have a lead, let’s not squander it now.