Brexit Could Be Devastating for UK Tech and Creative Industries
Britain's exit from the European Union will be "devastating" for the UK's creative industries and "negative" on the country's overall tech sector, according to pundits and analysts. It was hard to find any positive predictions following the results of the national referendum Friday morning.
Days before the vote Juniper Research suggested that two thirds of employees it interviewed in both UK and international firms were concerned about the effects of Brexit. Most of those interviewed believed that it would be harder for UK tech firms to attract and employ individuals from EU countries. Meanwhile, nearly two-thirds believed that the industry would suffer as a result of reduced funding from the EU for the UK tech sector and that London would be less attractive as a tech hub.
Of those who believed Brexit to be positive for the tech sector, more than 80% cited less EU red tape as a benefit.
London has attracted companies like Google and Facebook, which has set up a VR development team there, in part because of the ability to access capital from the European market of which London is the defacto financial capital.
That status must now be at risk.
The tech industry has largely opposed an exit from the EU.
"A March survey of tech industry people in London, the European capital of tech, showed that almost 90 percent of those polled opposed Britain leaving the EU," reported Recode in an article published shortly before the vote.
"Britain is the leading light for open liberal markets, and if it leaves, there won't be many large countries left preaching that kind of thing," said James Waterworth, the Europe VP of the Computer and Communications Industry Association (CCIA). "The European market would potentially become a much more hostile place."
Efforts to create a "digital single market" across the EU will likely be impacted, and data sharing "safe harbor" agreements may be stalled.
The shift in balance of power could also negatively affect tech companies.
"The block of more market-oriented countries including the Scandinavians and the Dutch will shrink from 35 percent to 20 percent," added Waterworth. "All future rules that affect the tech industry are much more likely to be more restrictive, less accommodating."
Taavet Hinrikus, CEO of foreign exchange service TransferWise, is quoted in The Guardian saying that the industry will have to "wait and see" to find out the long-term effect.
"This is likely to affect regulation and the movement of talent, two massive issues for business. The two main benefits of being part of the EU are access to talent because of the free movement of labour and the fact that you can 'passport' regulation so if you’re regulated in the UK, you’re regulated across the EU. We don’t know what’s going to happen with either of those."
The film and TV sector have been huge beneficiaries over a long period of time from EU funds—money which will now likely dry up. A key reason why studio blockbusters and high-end dramas do shooting and post production in the UK is access to funds, a chunk of which is accessed through co-production deals with agencies in continental Europe.
The chairman of the Independent Film and Television Alliance (IFTA), the trade association representing the companies behind independent film and TV the world over, has described the UK's exit from the European Union as an event that is "likely to be devastating" for the creative sector.
"The decision to exit the European Union is a major blow to the U.K. film and TV industry," said Michael Ryan in a statement. "Producing films and television programs is a very expensive and very risky business and certainty about the rules affecting the business is a must."
He added, "This decision has just blown up our foundation—as of today, we no longer know how our relationships with co-producers, financiers and distributors will work, whether new taxes will be dropped on our activities in the rest of Europe, or how production financing is going to be raised without any input from European funding agencies."
Before the vote, 59% of producers, broadcasters, and distributors said Brexit would be bad for their business, according to a survey conducted by Media Business Insight (MBI).
One of the main reasons for this is that the export of British TV shows and formats to European broadcasters is worth around £376 million a year, and many were worried that this would drop if the country voted to break ties with Brussels.
The EU’s Media programme alone injected €130m into the industry between 2007 and 2015, contributing to content production budgets.
An exit from the EU would also mean the abandonment of the various EU-backed Television without Frontiers directives which include proposals to permit existing national subscribers to view their paid-for programming in other EU countries online. Also at risk are the EU-backed regulations to permit Europe-wide data-roaming and fair-prices for cellular telephony usage.
Those arguing for the UK to remain in the EU, including the Inernational Monetary Fund, had warned of economic meltdown if the UK opted out. As if to prove them right, sources told the BBC that American investment bank Morgan Stanley is speeding up the relocation of 2000 jobs from London to Dublin or Frankfurt, though Morgan Stanley denies it.
The UK's position as the leading international hub for global media groups is under threat as the prospect of a no-deal Brexit grows