UK risks missing out on large share of digital industrial revolution spend

We are currently amid an industrial revolution which is transforming every sector, but uncertainty in the UK brought on by Brexit might mean the UK does not get a good share of the massive tech business opportunity.

Britain benefited from the Victorian industrial revolution in the 18th and 19th centuries, which was ironically fuelled by workers from other European countries, but could miss out on the current digital equivalent.

Artificial intelligence, IoT, cloud computing, big data and many more are technologies that every business needs to plan for. This means big business for those with the skills to support transformations,

But the UK could fall behind in the digital technology sector unless it gives businesses a clear idea of the post-Brexit relationship with the EU, and for that idea the rest of the world. Even when the UK government does have more idea of the post-Brexit business environment there is no guarantee the firms will hang around.

Tech firms, which are international by nature, will move to locations that support their growth.

There are Brexit fuelled uncertainties among tech firms about the loss of access to the biggest free trade area in the world as well as potential shortages of skilled staff, as EU citizens turn their backs on the UK.

Last week, ahead of the budget, TechUK called for some clarity. It warned that tech companies will not hang around indefinitely. The organisation, which represents UK tech companies, said: “Tech businesses are global by nature, and many won’t simply wait around forever. Progress is needed on Brexit, and this budget is a golden opportunity for the government to show that it is truly able to prepare the UK for our future outside the EU.”

I was at an event in June where startups from the fintech world were discussing Brexit. One told me at the event that the company, which he did not want me to name, already had plans in place to move from London to Dublin if the post-Brexit environment is unfavorable in the UK.

The digital industry is vital to all business sectors with companies either on digital transformation journeys or at least planning one. They will want to ensure they have access to the right skills and experience.

London has thrived from its position in the world as a centre for finance and a cosmopolitan business centre. But no country has a God given right to be a place for business, they have to earn it. According to a recent Economist Intelligence Unit study 48% of businesses will move country to access the right business ecosystems.

There is a lot to lose. In the study London was ranked Europe’s top destination for digital transformation, currently at 9th position globally. The UK and London in particular will suddenly face a raft of revitalised competitors in Europe eager to attract tech companies from the UK or encourage their home grown talent to set up companies at home rather than being lured by streets paved with gold.

But there are lots of cities in Europe eager to pick up any stray startups that want to remain in the EU. Dublin, Stockholm and Amsterdam are just three examples.

Indian city Bangalore has the best environment for businesses to transform digitally, according to the research of 45 global cities. Mumbai and New Delhi were also in the top four.

Businesses today are setting up business services hubs across the world where they can access the right skills and investments. A place like Bangalore is home to some of the biggest companies in the world and a wealth of talent, particularly in IT. As it becomes more and more important in the age of digital transformation cities like Bangalore will become even more attractive to businesses.

Then you have Estonia which is offering entrepreneurs form anywhere the chance to set up companies in Estonia. The e-residency scheme has already had more applications than there have been births in the country so far this year. The e-Residency government programme aims to attract entrepreneurs from other countries to register EU businesses in the Baltic state by providing non-Estonian citizens with easy access to online government services.

For a small start-up it is probably easy to move at shorter notice unlike the big banks for example.

But the big banks are planning for the worst. Goldman Sachs CEO, Lloyd Blankfein, has set off a few alarm bells recently with his Twitter activity. In one he suggested he might be spending more time in Frankfurt soon, despite the building of a new European headquarters in London. He also stoked the fire a bit more when he said the company “hopes” to fill the new headquarters, suggesting not as many jobs as expected in London.

Or perhaps this is part of a cunning plan for the UK to leave the UK and give it carte blanche, if I can use the phrase post–Brexit, in terms of business environments. Maybe the UK government wants to offer tech firms incentives that it is currently not allowed to., in a bid to take more of the digital transformation  revenues on offer.