The term “Brexit” has stolen headlines since late June 2016, leaving people all over the world wondering—what does this word mean? A portmanteau of the words “Britain” and “exit,” this nickname for the British exit of the European Union (EU) may go on to have a large impact on the technology sector.
After the June 23 referendum asking English voters: “Should the United Kingdom remain a member of the EU or leave the EU?” the nation ultimately decided it wished to abandon this previous affiliation. Reasons for the nation’s decision varied from the United Kingdom’s desire to once again establish itself as a culturally unique destination, Euroskepticism and an overwhelming opposition to immigration.
While these reasons to break away from the Union helped lead to the final selection, many consequences and implications of this major decision are yet to be determined. For example, although the EU’s previous partial authority over the United Kingdom’s economic policies and regulations has resulted in public mistrust, according to the New York Times many worry that this move will hurt the United Kingdom financially.
In one study by Britain’s National Institute of Economic and Social Research, it found that through the decrease in immigration acceptance, losing the immigrant labor force could lead to lower productivity, slower economic growth and decreased job opportunities within the United Kingdom. Previously making up approximately one-sixth of the EU’s economy, wider ramifications could also include troubles in terms of the global market.
Tech’s Uncertain Future:
According to Forbes, thus far the “Brexit” vote has cost the U.K. its perfect credit rating and could go on to impact data sharing, weather forecasting, the IPO market, professional soccer and the whiskey business. Additionally, this leaves tech firms and start-ups wondering how new regulations will impact their business.
Without the EU’s support, the flow and transmission of data and information across borders may become complicated. Also as a result of the “Brexit”, in order to prove its ability to protect data of or relating to the EU, the United Kingdom will now have to reform its privacy laws in line with the new EU rules.
Lastly, the leaving of the EU could cause British startup companies to lose the confidence they had already worked so hard to establish within the market and sector. It would, therefore, make it more difficult for these professionals to hire foreign talent and to gain necessary investors—good news for their competitors.
“Only since 2015 was Berlin able to surpass London, the previously dominant hub of Europe, in the number of and overall volume of financial transactions from startups,” said CEO Christoph Gerlinger told Fortune. “This development will now accelerate and the distance between Berlin vs. London will increase. We expect a significant decrease in new incorporations in London in favor of Berlin, as well as an influx of successful London startups. This will be particularly true of the especially dynamic [financial technology] sector.”
Yet, because there is much work still to be done before the United Kingdom officially leaves the EU, which is predicted to happen around 2018, companies will have to start preparing for the future. Included in this preparation should be cautionary plans to help meet the standards of a variety of possible regulations yet to be imposed. At this point, only the future will tell if this “Brexit” will lead to a “Texit,” pulling technology away from its ever-increasing stature.