In or out? Do UK tech companies really want to leave or stay in the EU?

With the British public set to vote on whether the UK will leave the EU this June, supporters of both sides of the issue share their thoughts on what they believe is the best outcome for the tech sector.
Written by Danny Palmer, Senior Writer

A recent techUK poll suggests the British tech industry is overwhelmingly in favour of remaining within the European Union.

Image: Getty

The looming referendum on whether to stay in or leave the European Union is the dominant subject in UK politics right now. With the date of the poll set for June 23, much of the debate is headed up by politicians, with Conservative Prime Minister David Cameron and Chancellor George Osborne campaigning to stay in -- along with the majority of the Labour Party, Liberal Democrats, Scottish National Party, and Greens.

Meanwhile, the 'leave' campaign has found a tousle-haired figurehead in London mayor Boris Johnson, plus Conservatives Michael Gove and Iain Duncan Smith (along with many of the party's rank and file members). Unsurprisingly, UKIP leader Nigel Farage is also campaigning for an EU exit.

Along with political issues, the outcome of the poll will substantially impact the technology industry. And a recent survey by technology industry trade body techUK suggested that the vast majority of UK tech firms wish for the country to stay part of the EU.


techUK stats on whether members of the tech industry want to remain part of or leave the EU

Image ZDNet, data from techUK

According to those who wish to remain in the EU, the open market allows tech firms to easily do business across all of Europe, as well as supplies those companies with a wider selection of employees who come equipped the required skills.

It's because of that easy access to a much wider market of 500 million people -- compared to 65 million of the UK alone -- that Richard Davies, CEO of cloud service providers ElasticHosts, supports Britain remaining part of the European Union. He argues that a Brexit "would have a detrimental effect on our business".

The ability to freely and easily hire staff from Europe, he argues, has played a large role in the company being able to succeed and grow since it was founded in 2008.

"Being based in London means we have direct access into the European market, while we also hire a lot of staff from Europe, so we support free movement of EU citizens into the UK," says Davies, who attributes close ties with Europe as vital to ElasticHosts' future.

"We were one of the first cloud hosting companies to launch in Europe and since then have benefited greatly from the UK being part of the EU and the freedom of trade this allows. Close ties to Europe let us reach more customers and recruit the right talent, so we would be better off if we stay a part of it," he explains.

Martin Campbell, MD of London-based software-as-service provider Ormsby Street, agrees. He is concerned the commitments that the government made during the election campaign to try and appear tough on Europe "could now threaten the growth of the UK technology sector".

Campbell warns that the 'leave' campaign is "misrepresenting the role that Britain's membership of the EU has in contributing to the success of technology firms in the UK".

Like Davies, Campbell suggests the movement of labour across the EU as important because "there are many tech firms who rely on the availability of a workforce with diverse skills from across the EU to grow their businesses successfully in the UK".

This ability to easily bring in employees from other countries, he argues, is not only vital to the UK's technology sector, but also the country as a whole, given the technology sector's input into the economy.

"Our ability to bring in the skills and capacity our workforce needs to grow and innovate is key to ensuring the success of the British economy. Britain's membership in the EU is important and should not be jeopardised," Campbell says.

It isn't only British companies which have expressed concerns about the UK leaving the European Union; US business leaders have also warned against it.

One example is Ross Mason, the British founder of San Francisco software firm MuleSoft, who argues that if the UK leaves the EU, British technology firms could find it not only more difficult to ply their trade within Europe, but also throughout the rest of the world.

"One disadvantage of moving away from EU would be the exit from the EU's Single Digital Market initiative to make Europe a world leader in information and communication technology in the new digital era. That means companies in the UK may miss out on taking advantage of the free flow and movement of data across Europe, as a result of the EU's efforts to enhance the interoperability of devices, applications, data repositories, services, and networks," he said.

Mason suggests that the UK needs the EU in order for its technology companies to have a chance of becoming globally successful.

"While US tech companies can afford to keep their business in the US with a population market of more than 350 million, the UK is in a different situation with a much smaller market to address with a population of approximately 65 million. The only way Great Britain can be 'great' in this new digital era is to ensure that British companies can easily deliver digital products and services beyond the physical shores of its island," he argues.

At the same time, Mason suggests there could be a silver-lining for the UK technology industry, should Britain vote to leave the EU, in that businesses would be required to become more innovative in order to make an impact.

"There is an argument to be made that the UK technology industry may benefit from Brexit because it will put more pressure on industry and government to innovate in order to compete. It could shake up the status quo and drive new strategic thinking to leverage UK resources as a hub to help develop emerging markets, such as Africa," he says.

Mason claims that the UK tech scene "hasn't seen much new and exciting developments in a long time" and there hasn't been any defining technology that the UK is known for.

He therefore suggests that if the country leaves the EU, it would create "a bit of fire" which would encourage "the UK tech industry pick up the pace and drive new thinking on what the UK stands for in this digital era".

That isn't the only positive outcome of a Brexit. According to Calum Murray, partner and head of commercial technology at law firm Kemp Little, leaving the EU could also free up UK technology firms from having to adhere to the sometimes restrictive European legislation and regulation.

"Proponents of the Brexit argue that tech businesses, like all others in the UK, will benefit from being freed from the need to comply with additional laws which are passed at an EU level. It's also possible that in leaving, and no longer having to 'pay its dues' to the EU fund would leave the UK government in a place where it could use some of the 'dues' saved to reduce the tax burden on UK tech businesses," he says.

The finances saved from not being part of the EU could be used for direct investment into the UK's technology sector, "by their services being bought, or indirectly through infrastructure, facilities and equipment support to growing UK businesses," Murray claims.

That's a view shared by Adam Hale, CEO of global cloud human resource management system providers Fairsail, which has offices in London and San Francisco. Hale says that in balance, he's "in favour" of an exit from the EU, arguing "there would be reduced costs to the UK and so for corporate and personal taxes, that would be positive".

Hale also suggests that for Fairsail, a cloud software provider, the business doesn't require the EU in order to sell its products internationally, claiming "trade agreements do not impact on our ability to work with different companies in different countries".


Most UK technology companies believe they'll have to comply with EU rules, regardless of the referendum result.

Image: ZDNet. Data: techUK

But while there are those like Hale who believe the UK could go it alone, Julian David, CEO of techUK, points out that it's likely that the country will still need to adhere to EU regulations regardless of the referendum outcome -- a view shared by much of the UK technology industry -- and therefore having a seat at the table in Brussels is the best way to ensure the UK technology industry wields some influence on its future.

"A British exit would mean the UK giving up control over how those rules are set. That could put UK businesses at a real disadvantage," David says.

Whatever the result of the EU referendum, 23 June is set to be an important day in shaping the future of the UK technology industry.

Read more about European tech

Editorial standards