How will Brexit negatively affect the UK IT sector?
An online report
28 January 2018
Post Brexit, the effects will be influential to how industries operate, specifically the IT industry. This report covers the potential consequences the United Kingdom could have to deal with as a result of Brexit under various headings.
The potential challenges of e-commerce in the UK
The UK-EU have had a steady output in e-commerce, according to (Keyes, 2017) pre Brexit. Tech-savvy consumers and major corporations are part of the reason why.
Post Brexit could pose some unwanted problems. The UK was responsible for 33% of all EU online revenue in 2016, and the possibility of trade restrictions which are inevitable after Brexit has come into full effect,separating from the EU, may complicate cross-border e-commerce between the EU and UK. There are still limitations that prevent the e-commerce sector from reaching its peak when it comes to online sales. A “hard Brexit” would make the UK and EU negotiating a new legislation agreement that there may be more tariffs and surcharges in online sales in e-commerce.
Part of where the concern is that there are some questions of uncertainty of how Brexit will actually have an impact on e-commerce. The Regulation permits that customers can be entitled a sum of compensation for e.g if they are delayed in an EU country for more than a number of certain hours but with Brexit and inevitable regulation changes, it could have a negative bearing on consumers. (Lloyd, 2017)
The EU’s Single Digital Market Initiative
According to (Carter, 2017) from TechRadar, post Brexit, the UK will see the loss of access of the European cloud that will provide Europe’s millions of researchers and 70 million science and technology professionals a virtual environment in which to store, manage, analyse and reuse research data, as well as a €500 million (around £380 million) pan-EU network of digital innovation hubs where businesses can obtain advice and test digital innovations.
The increase in competitive advantage
When a fresh market in the industry is open, there is competition where successful firms get the advantage over their competitiors and the winner is often the first firm to get network effects running in its favour. (Anderson, 2017).
Brexit is also affecting the homegrown skilled workers as well, due to the fact that the companies are now relying heavily on these individuals to further push the internet world in the UK. 70% of about UK IT labourers say they’ve viewed as departing from the UK since Brexit began to take shape, preferring different places in Europe and North America as well (theHRDIRECTOR, 2017b).
Impact on telecommunications + media
· This topic more or less focuses on how the customer would be affected after possible policy changes.
The UK will have to also make the choice of whether staying or leaving the EU telecoms market. As such, UK customers might still be on the receiving end of higher roaming charges when they are not in the UK as it could be under legislative measures. (Nortonrosefulbright.com, 2017). It also seems as though with this, comes a change to how roaming services will operate. Although the UK are technically still in the European Union (EU), a majority of telecoms corporations had to relook their policies and regulations on roaming charges which possibly would affect a majority of British citizens who are outside the UK. What this means is that customers would have to be more careful in how frequent they make calls outside the UK, as well as calling internationally.
This can be negative as well for the corporations. They might have to abide to different laws that can affect the way they operate as a business, which in turn could result in a decrease in revenue after a certain period. (Sutherland, 2017).
The possible effect on tech giants
Major tech giants will have to re-evaluate their capital budgets come Brexit. Cloud computing is becoming the “norm”. For example, Microsoft stock went downwards 10% this year and its hares were not pricey at 17 times expected revenue for the next 12 months. (Ray, 2016). The problem was that Microsoft’s traditional business of selling software directly to companies has suffered, with unrest in emerging markets such as Brazil. If Brexit adds to the pressure on top of that turmoil, it will weigh on Microsoft’s results.
In a way, most of the smaller tech companies in the UK lose out from investment from the EU itself.
Data Protection and cyber crime
Since the UK will separate from the EU, it could be more difficult for local organisation to co-operate with the rest of the continent. The risk is that is more possible that major companies would be more vulnerable to cyber attacks (The Independent, 2017), as well as putting at risk private consumer information. The government has attempted to create a model with the EU as its partners in attempts to try and decrease the risk wherever possible. (UK outlines proposals for shared approach with EU on data protection after Brexit, 2017). This as well can affect an organisation’s overall authority within a market. The issue surrounding this is that with the governments attempt to help issues, policy changes, it could prove to be complicated in future with the control of data not entirely assured from major organisations. (Bedell-Pearce, 2017)
Future investments in tech sector
With the possibility of the UK gaining access to 5G network speeds, there is the risk that it might not come to fruition due to the uncertainties that Brexit impose. According to (Burkitt-Gray, 2017), Broadband Stakeholder Group (the UK’s government advisory body) stated The UK telecoms industry inputs a sum of £30.2 billion to the UK economy. Since the BSG are advisors to the UK’s broadband policy, telecoms and electronic media companies like Sky and British Telecommunications (BT) could be more vulnerable and look therefore look to adapt to the changes at the expense of the consumers.
In conclusion, this report discussed the possible negative consequences that the United Kingdom could face from the concerns in data protection and privacy, to how the telecommunications and e-commerce markets would be effected. As of now there is still a shadow of uncertainty to what Brexit will do to not only the markets concerned with Information Technology, but the UK as a whole as well.
In the beginning, when I first started doing research on this topic, it was difficult for me to find the accurate sources that would best suit the topic at hand. I was very disappointed with myself from the feedback I had receive from the research proposal as I had not understood what I did wrong. But I did not let this affect me too much as I took it as a learning curve and did not want to come up with excuses that would not benefit me in future. Afterwards, I took a couple of days in gathering more information for my report. It helped me a lot that I drew up a strategic plan to how I would approach the report assignment. This gave me a clearer outlook to what I was going to include in the report and how would attempt to make sense of what I read from the academic journal articles.
As time went by, I surprisingly grew an interest to my research topic and found it fascinating to the uncertainty of the impact Brexit will have in technology, and to be honest, I did not initially think that would happen but it seems as though I was wrong, as I thought about the research paper and content in different ways I had not before. I believe this gave me a clearer idea to what I was going to include in the report. I dedicated some spare time that I had reading some newspaper articles related to the topic. I thought that by doing this, it would give me a better understanding of the topic itself. As a first-year student, it was an eye opener to learn more about the implications, risks, uncertainties that come with using technology, and this module has been influential in realising it.