No-deal Brexit will hurt us and we're not ready, say tech companies

Despite the growing risk of a no-deal Brexit, many tech companies don't know how to prepare themselves -- or even whether they can.
Written by Steve Ranger, Editorial director, ZDNet on

Tech companies have warned that a no-deal Brexit would hurt their businesses and that they are unprepared for its impact.

In a survey of 276 member companies by tech industry group techUK, 70 percent said that they believe that a no-deal exit from the European Union (without any ongoing agreement about trade and other cooperation) in March 2019 would have a 'very negative' or 'fairly negative' impact on their business. Only five percent said it would have a 'very positive' or 'fairly positive' impact on their business.

The tech industry has long warned that a no-deal Brexit would be very harmful because it could cause problems for data flows into and out of Europe, and also make it more difficult to hire sought-after staff from Europe (and for UK staff to work in Europe). Tech companies also have worries about regulation and trade, as well as fears about investment, which may already being realised --venture capital investment in UK tech companies slumped significantly last year.

Image: techUK

The survey also shows that, overall, 84 percent of respondents believe the UK is unprepared for no deal. Just over half of the companies (51 percent) that responded said they had taken some or many 'active steps' to prepare for the UK leaving the EU without a deal, compared to 42 percent who said they had taken no action. But no-deal planning varies by company size: nearly two-thirds (65 percent) of small companies with less than 50 staff said they had taken no action. About half (49 percent) of medium-sized businesses with 50-249 staff had taken action, as had 83 percent of large businesses. Those steps include stockpiling components, re-writing contracts and moving staff and operations out of the UK.

Image: TechUK

When asked by techUK why they have not taken steps to prepare for the no-deal scenario, many firms said it was because they were unable to predict what impact it would have (49 percent) or were unsure what steps to take (37 percent).

Respondents to the poll, which was carried out in December, were split over what should happen if Parliament rejected the Withdrawal Agreement -- something that has now happened. Half of those who responded to the survey said that supporting calls for another referendum would be their first choice., while 63 percent selected a second referendum as one of their top three preferences. Supporting for a delay to Article 50 in order to allow time for further negotiations was put in the top three preferences of 64 percent of respondents.

SEE: The Brexit dilemma: Will London's start-ups stay or go?

Only 11 percent of techUK's respondents viewed accepting a no-deal exit as their first preference, while less than a third (27 percent) listed it in their top three preferences. Only two percent picked a General Election as their first option.

techUK CEO Julian David said that, with the Withdrawal Agreement overwhelmingly rejected by Parliament, the UK now risks no deal by default unless the deadlock can be broken.

"Many of our small and mid-sized members in particular do not have the resources or information needed to effectively prepare for No Deal. They want a deal that works and a future relationship that retains a high level of alignment and access to the EU market on issues that matter to the sector, such as the free flow of data, regulation and the availability of talent," he said.


'A very, very bad thing': This is what a no-deal Brexit means for tech companies and jobs

Tech companies are worried about data flows, staffing and investment in the event of a no-deal departure from Europe.

'No clarity', 'misguided' and 'a huge concern': Brexit minister's pitch to UK tech industry falls flat

Dominic Raab spoke of a "pro-tech" and "global" Brexit - but many in the sector still don't feel as if the government is listening to their concerns.

Tech startups wading into uncharted waters as Brexit looms (TechRepublic)

Steve Ranger discusses the current state of Brexit and possible implications for jobs, economic growth, and what it means in general for tech startups.

Jaguar Land Rover could be readying to slash 5,000 jobs, report says (CNET)

Times are tough at JLR, and with a potential no-deal Brexit looming, they could get tougher quickly if the company can't scare up some cash.


Musk did not seek due diligence and the $44b deal will be completed: Twitter

Musk did not seek due diligence and the $44b deal will be completed: Twitter

Social Media
Malware is targeting crypto wallets, says Microsoft: Here's how to protect yourself better

Malware is targeting crypto wallets, says Microsoft: Here's how to protect yourself better

Google: These 'curated' open-source packages will improve software supply chain security

Google: These 'curated' open-source packages will improve software supply chain security