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Brexit uncertainty dominates UK’s digital conversation

Uncertainty over the impact of Brexit dominated conversations at TechUK’s second annual Supercharging the Digital Economy event. Can technology really lessen the impact?

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With just over 18 months to go until the UK exits the European Union (EU) at the end of March 2019, and negotiations between Westminster and Brussels still mired in controversy and recrimination, the sense of uncertainty hung heavy over TechUK’s second annual Supercharging the Digital Economy event in London.

At no point was this more apparent than when the assembled audience was polled on what they thought would be the biggest potential hindrance to the UK’s digital economy. The overwhelming majority said Brexit.

The UK’s tech industry, and Computer Weekly, came out strongly in favour of Remain back in 2016, but since then, many digital leaders have come to take a pragmatic view of Brexit, and digitisation has been held up as a shining example of how to help make the UK economy an independent, competitive force on the global stage.

And for good reason. Julian David, TechUK CEO, said that in spite of everything, the digital sector was in good health and contributing disproportionately to the UK’s economic growth.

He said the opportunity to build on the UK’s existing position as a net exporter of digital services was clear to see, particularly when looking to countries such as China, India and the US, free trade deals with which would be glittering prizes for the UK’s trade negotiators after March 2019.

“Post-Brexit, we need to set our sights even higher,” said David. “We need to be the leading digital economy, and the leading digital society.”

Digital minister Matt Hancock said the government was working hard to ensure the right environment to build thriving businesses out of the UK’s world-class R&D capabilities.

“It’s not enough to have a good idea and the will to drive it through – it requires a strong environment for enterprise,” said Hancock. “We understand that to have a thriving digital economy, we need to support tech businesses at every level.

“Over the past year, we have seen investments in UK tech from the likes of Apple, Amazon and Google, but we have also recognised government’s role in ensuring there is enough investment capability, and expanded the British Business Bank’s capacity in the scale-up space.

“We are also making sure that we prepare Britain as a whole for success in what is the fastest advance in technology in history, and dealing with the fact that this affects so many jobs means ensuring everyone has the skills they need to thrive in the digital world.”

Brexit risk to new technologies

But one thing Hancock’s speech did not touch on was the controversy over the 58 reports covering the impact of Brexit on the UK economy, which the Department for Exiting the EU (DexEU) is refusing to release, and many believe hold the key to calming troubled waters.

So, in a session covering the development of new technologies in the UK – specifically, artificial intelligence (AI), blockchain and 5G mobile networks – it was left to TechUK’s invited panel guests to assess the risk their emerging sectors face. Some common themes quickly emerged.

Genevieve Leveille, founder and CEO of AgriLedger, a blockchain specialist focused on creating an immutable trusted ledger to enable small-scale farmers to retain a bigger share of their crop value, said that closed borders, and lost investment and talent, presented the biggest obstacles to her business’ future.

And Phil Brougham, who heads Emea SME sales at AI firm DigitalGenius, said: “Anything that negatively impacts movement of people and ideas is a con.

“As a software business, there will be an impact, and we need to work around some of these restrictions as they arise. As a data processor, GDPR is the real challenge on the horizon.”

Dan Warren, who heads up 5G research at Samsung Electronics’ R&D Institute, talked about isolation and loss of funding. “The funding that the European Commission [EC] provides to telecoms is fundamental to the development of UK talent and UK technology,” he said.

Helen Kellisky, UK and Ireland vice-president of cloud for IBM, also said the main issue would be around people and free movement, but she took comfort from the fact that “IBM took a decision ahead of Brexit to invest significantly in the UK in cloud, and post-Brexit we’ve not changed that decision”.

Government priorities

When it came to how the government can best offer support for the digital industries after Brexit, a number of common themes were much in evidence.

Samsung’s Warren said it was important to find a way to internalise the funding for technology that will be lost when the UK leaves the EU – although he noted that the government has paid into Horizon 2020 for some time to come – and give that funding sufficient weight to continue to drive innovation.

Matt Houlihan, director of government affairs for the UK and Ireland at Cisco, said that, after Brexit, it was important for the government to try to maintain the fundamental elements of what makes the UK such a strong tech economy.

“We have a great R&D base, we’re a really easy place to set up a business, we have a system that actually allows skilled people to come into the economy when shortages are apparent, and we are internationally open,” he said. “All these things are important when you think about why people invest in the UK, so let’s not throw that away.”

Houlihan said the government should act to build up the certainty the industry needs to ensure foreign businesses want to invest in the UK, as well as to act on skills, something brought up by many others, such as Brougham at DigitalGenius, who called for the government to invest even more in science, technology, engineering and maths (Stem) education.

Clearer guidance

IBM’s Kellisky wanted to see clearer guidance around the government’s approach to technology and encouraged the regulatory authorities to do more to. Like skills, regulation was also picked up on by several other speakers, most of whom thought the government needed to do more.

Sheridan Ash, technology and investment director at PwC, said: “Regulation is something we need to get on top of because generally, while the UK is ahead of a lot of other countries technologically, the regulators tend to be a bit behind.

“It is difficult. How do you regulate the monitoring of thousands of blockchain transactions, or security around billions of IoT devices? We really need regulators to help.”

Dan Byles, a former MP and now vice-president and head of corporate development at internet of things (IoT) software house Living PlanIT, said that, by and large, the government was actually doing a reasonable job when it came to regulation.

He suggested a more useful priority might be to address some of the challenges that exist in terms of finding customers to invest at scale in emergent technology, and for the government to become a smart procurer of digital technology.

“There is no supply-side failure on smart city technology and the IoT, but there are challenges finding customers to invest at scale, and the government is ideally placed to do that,” he said.

“Requiring companies to get involved with digitisation if they want a government contract is far more interesting than giving a grant to explore something.

“Doing it at home has got to be the first step and the most important step when it comes to arguing we can do it overseas.”

Trade deals that do digital

Signing overseas trade deals with new global partners outside the auspices of the EU was held up by the government as one of the key benefits of Brexit, so naturally this was also a key discussion point.

John Simmons, minister counsellor for commercial affairs at the US Embassy, discussed US president Donald Trump’s attempts to renegotiate the North American Free Trade Agreement (Nafta).

Part of Trump’s rationale for this is that much has changed since Nafta was first signed, and the original text obviously failed to account for the advent of digital, said Simmons. It was therefore important that any future trade deals took digital into account, he said.

Cisco’s Houlihan took a similar view. “If Brexit pans out how the government suggests it will, it’s going to be negotiating trade deals all around the world,” he said.

“But actually, we’re in a much more digital world now, so how can we approach these deals from a digital business mindset? How do we get the right data deals and regulatory co-operation in place? We need to understand that, and approach it in the right way.”

Houlihan said that in terms of trade deals to support digital, it was vital to strike an accord with the EU as the UK’s closest and largest trading partner.

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“Elsewhere, we see great things happening in India, where there is great leadership being shown from the top down on things like smart cities and how you can use technology to raise productivity in enterprise,” he said. “I think any smallish company in the UK should be open to the US as well.”

The US government’s Simmons, meanwhile, drew on his previous posting as chief commercial officer to the US Embassy in the United Arab Emirates (UAE) and suggested that the Middle East should be a priority.

“There is a real effort to transform the Gulf economies away from reliance on the petroleum sectors, to really re-engineer the economy,” he said, noting in particular Saudi Arabia’s push to transform public services with digital technology as a significant project with huge resource behind it, and one that UK companies could potentially exploit.

Despite the decidedly protectionist stance on trade taken by the Trump administration, and the recent controversy over Bombardier, Simmons struck a pragmatic yet hopeful note when it came to the future trading relationship between the UK and the US.

He acknowledged that although it was hard for both parties to open any formal negotiations given the UK still has no ability to negotiate new trading relationships outside the EU, backroom discussions have already begun on areas where “we can co-operate and advance opportunities for future development”.

“There are 1.3 million UK citizens employed by US companies,” said Simmons. “These firms came to the UK because it’s a very important environment. It’s important to get it right. It is a priority for us to bring US companies here.”

But perhaps the most optimistic voice came from Christine Ashton, SAP global chief digital officer for the S/4Hana cloud team, who said the government should look to play up the borderless nature of digital technology to drive the industry beyond any future trade deals.

“The borderless aspect of technology means we can choose what we get involved in,” she said. “If we start to show what we’re capable of, we can be the de facto partner for some of those things.”

Embrace innovation

After Brexit, said DigitalGenius’ Brougham, it will become even more important for business leaders and CIOs to act with boldness and consistency, and crucially, not be put off by setbacks.

This was echoed by Siemens’ development director for digitalisation, Paul Brodrick, who said it was important that CIOs were prepared to learn from failures. Brodrick revealed the existence of a “failure of the month” award within Siemens, which R&D teams use to assess and learn from ideas that maybe didn’t work out.

Samsung’s Warren said it was important for CIOs to go out into their businesses to “find the innovation that exists and is going on within their organisations, and embrace it”.

Richard Jones, board adviser at BluePrism, a developer of robotic process automation software, agreed it was important to seek out pockets of innovation that might otherwise be missed. “To all my clients, I say get your feet wet,” he said. “It doesn’t cost a lot to get your feet wet.”

PwC’s Ash cited a survey conducted by her organisation this year that suggested business leaders were not investing in emerging digital technology because they didn’t really understand either the technology or its impact on jobs and skills. She said it was incumbent on the industry to address some of these issues, and for businesses to adopt more responsible and ethical technology policies “to maximise the opportunities of technology while mitigating consequences such as job losses”.

At the same time, said Jones, it was critical to make sure the business focused on talent remodelling, not just in terms of technical skills, but also to improve wider leadership skills.

“A big problem for UK plc is our labour pool is very soon going to shrink, and we don’t have mitigating plans to deal with that,” he said. “There could be two to three million less people – this is the Baby Boomers retiring.”

Despite all the fear, uncertainty and doubt, it cannot be denied that there is some potential for Brexit to bring benefits for the UK if handled smoothly and correctly, but to date there are few in the business world who would argue that it has been. Also, the clock is ticking and more than a quarter of the negotiating time mandated after the triggering of Article 50 has now elapsed. The biggest challenge for the UK as a whole – not just the digital and technological industries – will be to adapt quickly, in case the direst predictions of economic collapse come to pass.

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