By any number of metrics, the UK’s tech industry is flourishing. Within the past 10 years, we have rapidly emerged from the technological shadows to become one of the three most important digital hubs in the world. The sector in this country is now larger than the rest of Europe combined and we are home to an impressive 40 per cent of the continent’s ‘unicorn’ tech companies. Against the US, the powerhouse in this sphere, we are also becoming increasingly competitive – even out-stripping our transatlantic counterparts in terms of start-ups per capita.
Whilst we may lead the way in Europe, our continental neighbours are also enjoying their own tech awakenings. Stockholm has produced a number of Europe’s largest digital companies – including Spotify – and is bolstered by the continent’s highest penetration of fibre broadband. As outlined by Nesta, the size and policy conditions present in Amsterdam make the city an attractive environment for new start-ups. There has also been a significant push from the city in recent years on fostering a culture of innovation – adopting a Smart City initiative that permits product-testing in a “living lab”.
Paris has firmly set its sights on becoming a major global tech hub and the city is home to the ambitious ‘Station F’ – the world’s largest start-up campus established by digital visionary Xavier Niel. They are also supported by a major advocate in the form of French president Emmanuel Macron. He has helped ensure the country’s regulatory environment actively supports emerging fintech companies and has expressed his desire for a “country of unicorns”.
Similar growth can be found across Europe. In Berlin, according to a McKinsey & Company report, the quickly maturing start-up scene could create up to 40,000 new jobs by 2020. In Barcelona, the city’s authorities have been quick to embed digital across a range of initiatives, including a major open data scheme.
For the European digital scene as a whole, a network of burgeoning tech hubs is a clear positive in terms of fostering innovation. Competition raises the bar for everyone – and is essential in loosening the grip of the US and Chinese heavyweights. If we in the UK are to retain our place at the head of the European digital table however, the ways in which we respond to the emergence of these other ecosystems are paramount – and intensified by the uncertainties of Brexit.
Ensuring the UK remains an attractive place to start and grow a tech start-up is a must and the Government’s decision to establish a National Investment Fund last August is a positive step. It will help to tackle the significant £4 billion funding gap compared to American firms and addresses concerns that funding from EU-equivalent funds may dry up.
The UK has a unique appeal as a global centre for finance and business, reflected through almost half of tech funding received in 2017 going to fintech firms. As we exit the EU, guaranteeing the ‘passporting’ rights of these companies should be a key objective. This will ensure firms based here will retain the right to export services to other European countries and would quell the fears of both emerging players and big hitters.
Another key issue is talent. The UK is in an enviable position as home to 4 of the world’s top 10 universities, creating a strong domestic workforce for the digital sector. But skill gaps do exist and over half a million new digital workers will be required in the next 5 years. It is therefore vital that we remain open to the best tech talent from the EU and beyond.
Recent signs are promising. Despite Brexit, 2017 was a record year for UK tech investment. Firms attracted around £3 billion in venture capital funding, almost twice the amount received the year prior. Comparatively, this is more than four times the amount attracted by Germany, and greater than Sweden, France and Ireland combined.
But we cannot rest on our laurels. The UK is at a turning point in terms of policy decisions and it is crucial that we remain open to investors, entrepreneurs and global tech talent to help consolidate this position for years to come.