What Brexit Means For CEOs & IT Leaders
On Friday, 24 June 2016, Britain faced a decisive moment when the majority of its population (51.9%) voted in favour of moving out of the European Union (EU). In words of the exiting Prime Minister David Cameron, Britain went through a giant democratic exercise, perhaps the biggest in their history. While in his exit speech he assured people of both Britain and EU of no immediate changes, the specifics will only be known as Article 50 is fleshed out once the new Prime Minister assumes office in October 2016.
Irrespective of which side of the debate you were on, Brexit is the new-world equilibrium for all in Britain and EU. On day one itself, the news played havoc on global markets wiping out USD 2.1 trillion from the equity markets. The day also witnessed a 10% crash in the GBP that hit a 31-year low at one point before settling at a 9.1% loss. Even the Euro wasn’t spared — it dropped 2.6% on the Dollar.
Greyhound Research believes despite the proposed outcomes of political and economic liberty arising out of Brexit, Britain’s reliance on the EU (and vice versa) will continue to be pivotal for their respective success. More importantly, we believe there exists a dense underlying fabric between Britain and EU, woven of political, economic and social threads. Below is a snapshot of why each of these threads in the fabric matter:
The Political Thread — Per European Parliament Information Office in the United Kingdom (UK),there are 73 UK MEPs (Members of the European Parliament). It’s interesting to note that Britain until now enjoyed the 3rd largest representation (MEPs per member state) only behind Germany and France.
The Economic Thread — The latest trade statistics from HM Revenue & Customs tells this tale eloquently. Imports into Britain from EU countries has grown by more than 24% between 2008 and 2014, i.e. from GBP 178 Billion in 2008 to GBP 221 Billion in 2014. Further, of the top 10 countries which Britain exports to (by dollar value), 7 are EU countries. In other words, 38.3% of Britain’s total global exports in 2015 were made to these 7 countries. However, not all EU countries carry the same weightage. From its total exports to EU, Britain exports nearly 50% to Germany, France and Netherlands, and imports 53% from the same countries.
The Social Thread — Migrant Watch UK cites the number of British people living in the EU in 2015 as 1.2 Million. At the same time, they note that there are 3.3 Million EU citizens in Britain. This easy cross-border migration across the two parties is likely to come under close scrutiny post Brexit.
Albeit the points above do great justice to magnify the density of the fabric between Britain and EU, Greyhound Research believes there also exists a close-knit science & technology thread.
The Science & Technology Thread — Per a statement by House of Lords Science & Technology Committee, approximately 18.3% of Britain’s funding from the EU goes to scientific research and development. Separately, the committee report states, ‘Based on the proportional contribution to overall EU finances, Britain contributes around 11% of the EU research budget and receives around 16% of the allocated funding, making it a substantial net beneficiary under Framework Programme 7 (FP7). This data suggests Britain received approximately EUR 7 Billion of research income under FP7, marginally behind the top recipient, Germany.’
Hence, we at Greyhound Research believe Brexit’s impact on this science & technology thread will be decisive in nature.
While it is certain that business exchange between Britain and EU will continue despite Brexit, all stakeholders can expect a fresh set of monumental challenges. Beyond those in common, stakeholders can well expect issues specific to them. Below are key highlights of why Brexit matters to all stakeholders of the technology ecosystem spanning Large Enterprises (and their IT Decision Makers), Telecom Operators, Government (and policies), IT Vendors (including channel partners), SMEs & Startups across both Britain and EU.
Why This Matters for Large Enterprises and IT Decision Makers
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