04 Feb Why Remaining in the EU Is Vital for London’s Tech Start-ups
This article was first published – Huffington Post, 04/02/2013.
David Cameron’s long awaited EU speech provides a good opportunity for UK policy makers, businesses and the general public, to re-address the UK’s relationship with Europe.
That the promise of a referendum triggered a five-point bounce in the polls demonstrates a significant interest amongst large parts of the UK public to revisit the European question.
As a passionate supporter of London’s tech startups, I am particularly aware of the benefits of the UK’s position in the EU and welcome Cameron’s focus on returning the EU to its basic common market principles.
History has taught us that unrestricted trade flow is a key economic driver of growth and prosperity. This fluid trade pattern benefits businesses of all sizes, as well as consumers, by offering them a choice regarding quality and price. It makes sound economic sense.
In this context, it is important that small and medium sized enterprises across the UK remain at the heart of the EU and, therefore, take advantage of trading opportunities with other European countries. Access to the single market is integral for British businesses and British jobs: we currently trade in excess of £480 billion with the EU, which is approximately 52% of the UK’s total trade in goods and services.
But more than that, EU membership enables Britain’s businesses to benefit from the collective bargaining power of one of the world’s most important trading blocs. It is likely that the 21st Century will see the agreement of even more deals between the world’s trading powerhouses, with bilateral deals that will be negotiated in Brussels with the US (and possibly NAFTA–US, Canada, Mexico), China, Brazil and other emerging markets.
In a world where technology is breaking down the traditional barriers to international trade and the Internet is creating an ever-expanding global marketplace, UK businesses simply must not find themselves on the sidelines of the action and disadvantaged by punitive excise taxes.
An isolated United Kingdom will struggle to compete in a world where innovative technology will underpin international trade and transactions by enabling the seamless global movement of goods and services. That Amazon’s annual revenues are larger than the GDPs of half the countries of the world illustrates the growing dominance of international trade, facilitated by the universality of the Internet.
The fact that 26% of non-EU companies currently have their European headquarters in the UK is of course driven in part by language, time zones and connectivity. But imagine how that figure would change if UK businesses no longer had access to free trade with the European Union.
One of the most prevalent accusations levelled at the European Union is that its red-tape and bureaucracy stifles British business and Cameron was right to call for Europe’s smallest entrepreneurial companies to be exempt from more EU directives.
However, we should not forget the other benefits EU membership brings to those small businesses, particularly in the technology sector. A recent CBI report highlighted that over 45% of employers envisaged they will face problems finding staff with Science, Technology, Engineering and Maths (STEM) skills in the next three years and that skill gap is most painfully felt by tech startups. Progress is being made to upskill the UK workforce through the Tech City Investment Organisation, in partnership with organisations such as Facebook, Intel and Blackberry, to inspire young people to study STEM subjects… this is a good start.
But these initiatives will take time to bear fruit. In the meantime, the EU’s free movement of labour enables British businesses to recruit the top talent from across Europe and to compete in the modern global knowledge economy. Gaining access to this talent, if it is in short supply in the UK, brings both STEM skills and probably a better understanding to a variety of new markets into which these tech businesses can quickly expand.
So, it is clear that membership of a European common market is vital in helping digital and technology businesses access more markets, potential customers, suppliers, and opportunities for growth.
But the relationship cannot stop there. So many of the decisions that make it possible for young tech entrepreneurs and companies to succeed are made in Brussels. It is essential that the UK has not just a voice, but a ‘significant’ voice, at the top table of European policy-making, representing the interests of British business. Frankly, we need this right now!