What Will Happen to London's Tech Startups if Brexit Goes Through? - Global Trade Magazine
  June 13th, 2016 | Written by

What Will Happen to London’s Tech Startups if Brexit Goes Through?

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  • Foreign tech workers aren’t taking job opportunities from native UK talent, say recruiters
  • Foreign tech workers are filling roles UK companies would be unable to fill otherwise.
  • Restriction on movement of European labor is going to have a negative impact on London's technology infrastructure.

Supporters of Brexit— the movement for the United Kingdom to leave the European Union—are adamant that wages will rise and unemployment will fall if the UK leaves the EU.

But in reality, foreign highly skilled workers aren’t taking job opportunities from native talent, according to London-based technology recruitment specialists Nick Waller and Alex Hemsley. Rather, the say, foreign technology workers are supporting and enabling UK-based companies to flourish, and these are roles companies would be unable to fill otherwise. Tech companies are already dealing with a shortage of UK talent, and in order to compete globally and produce high value startups it has been necessary to utilize overseas markets for highly skilled workers.

The technology startup scene is international by its very nature. In this fast-moving realm of innovation, there is greater demand for specialist skills than supply, and talent must take precedence over nationality or geographic convenience in the search for staff for any startup that wants to thrive.

The programming workforce is therefore a highly mobile one, always ready to move to a new startup or seize an opportunity across the world.

Many of those roles happen to be in the United Kingdom and overseas programmers have been laying the coded foundations of successful British tech startups for several years. The UK revenue authority earns tax from these workers and the domestic economy is boosted by any successful startup.

Waller and Hemsley, founders of Global {M}, note that 51 percent of the candidates they placed in UK startups over the past year being from outside the UK. Any restriction on the flow of talent into the country will stunt the growth of homegrown startups and ultimately the economy, they argue.

“I believe that any restriction on the movement of highly skilled European labor is only going to have a negative impact on the London technology infrastructure, and therefore its validity as a major power on the bleeding edge of the technology and innovation sectors.” says Hemsley.

A recent survey by Silicon Valley Bank found that 72 percent of startup executives said leaving the EU would have a negative effect on their business while 95 percent said it is already challenging to find the right people for their teams. Moreover, the UK Treasury has predicted a year long recession on top of over 800,000 job losses if the UK are to vote yes to Brexit. UK voters will be casting their ballots on the Brexit referendum on June 23.

Waller notes the EU tech industry support that will be severed if Brexit is to happen, “The European Commission has been very supportive to the tech sector,” he says. “It would be a shame for British startups to miss out on their funding schemes such as the 2.8-billion euro funding, business support, and mentorship program SME Instrument and the EU Research and Innovation program Horizon 2020.”

Horizon 2020 promises nearly €80 billion of funding available for startups over the next few years. “Each day I see the huge value to our clients in being able to employ people that can freely move across countries’ borders in the EU to join them when there is such a competitive fight over talent,” Waller adds. “Brexit is something that risks this freedom for young businesses of the UK.”

Some say that through preferential visa rules, the UK will have the power to tailor the UK immigration policy to attract skilled employees into the areas required, such as tech. But Waller and Helmsley believe that Brexit will make the UK a less attractive place to relocate to. Ease of migration heavily influences a person’s choice of where to live and work, they note.

For Brexit supporters the answer lies in developing strong tech educational programs. But the Global {M} say it will take years to reap the benefits of creating a skilled workforce and startups again don’t have time to wait. They will also face the challenge of competing against larger European technology corporations for these workers.