What the referendum means for IT: Trade, data, people, headquarters and innovation

BCS is here to make IT good for society, and the result of the referendum on UK membership of the European Union will have significant long term implications for IT in the UK, and for how IT affects UK society. There is a fundamental uncertainty about all of the relevant issues, but there are some important areas where clarity of purpose needs to be quickly established to drive our national response. The digital environment is crucial to the long term success of the UK outside the European Union, and our initial thoughts on what we should be seeking through the process of exit and negotiation are:

  • Digital innovation as a key principle for international negotiation; access to digital markets with the freedom to innovate
  • Ensuring the UK’s data protection environment is recognised as having ‘adequate protection’ by the EU, while also supporting innovative approaches to data; pursuing the BCS personal data challenge
  • Recognising the importance of free movement of high-capability / impact academics and professionals in IT and Computing; pursuing the BCS capability challenge, with understanding of the true nature of the digital talent we need to foster, attract and develop
  • A focus on growing our academic research base and industrial collaborations in computing, to shore up and build on a major driver of UK economic success and international influence in the digital sphere
  • Reaching out to global digital businesses to assure that the UK is a long-term centre for global digital innovation and commerce
  • Act to build confidence in the continuing relevance of the combination of finance, talent, regulation and access to markets that is helping grow the UK’s tech start-up community, digitally support UK business, and underpin the UK's overall economic performance.

Trade with Europe

In the short term the uncertainty is likely to have an economic impact on every sector. The immediate shock to the pound and markets may settle, but if the pound remains low beyond the initial reaction this could have a few impacts. For example, underlying prices for cloud services are often set in dollars, and this could mean over a period that the cost of services rising, while on the other hand British-based IT services will become more attractive both domestically and for export. The shadow of wider macroeconomic effects (as they develop) may loom large, but for UK business the key will be the ability to respond positively and actively, adapting and innovating through the uncertainty and change, creating and leveraging the digital opportunities.

The most important question will be the UK’s trading relationship with Europe as this will influence the legal frameworks in which UK IT operates. This will have a substantial impact on everything from telecommunications pricing and regulation through data protection and copyright. A close trading relationship could mean the UK simply inheriting portions of legislation on data and digital markets, or steering a path that provides compatibility but greater freedom.

Continuing the theme of uncertainty, this could mean little change for the operating environment for IT within the UK, or substantial narrowing of the UK’s role in global digital services, or the opportunity to create a lean and fleet-of-foot digital environment while still trading effectively with Europe. It’s essential for the UK that the direction is the latter.

Data

The data protection act is a UK law, but one derived from a European directive. The timing of the introduction of the General Data Protection Regulations - set at a European level - and a formal UK exit could make for some difficult decisions for businesses about what they need to comply with. However, it is very unlikely that an exit from European digital markets will be in any way desirable, so compliance at some level is likely to be both necessary and desirable. There are also interesting opportunities for the UK in this context. Key to the trading relationship will be ensuring that the UK’s legal environment is recognised as providing ‘adequate protection’ under EU data protection law. The best possible scenario is where the UK manages to get that incredibly valuable compatibility, but with greater freedom to innovate in the legislative environment. The current list of recognised regimes is small, but encouragingly it includes Jersey, Guernsey and the Isle of Man; parts of the British Isles with some important lessons in how to operate close to, but outside, the EU.

The BCS personal data challenge becomes even more vital in this context, as it becomes a framework for the incredibly important conversation around how the UK wants its citizens to be treated regarding data. Outside the EU’s domain the UK could be regarded as vulnerable to a number of international forces, but with the right relationship the UK could play a global leadership role in this area. The opportunity is for the UK to act as a global demonstrator of how to ensure both individual control and commercial exploitation of the power of personal data.

People

The IT profession is for a number of reasons, heavily globalised. Questions over free movement and immigration will affect the UK in both directions; organisations wanting to employ non-UK nationals and UK IT professionals working internationally. Tightening of labour movement in either direction may affect IT professionals less than other sectors simply because skills shortages are widely recognised across the entire world. It may make cross-border working more difficult in terms of visas and / or processes – but at this stage it is entirely speculative.

This needs to take into account that digital capability is a continuum; there are dedicated IT specialists and they are incredibly important, but the broader talent pool the UK needs to supply, utilise and access is not so neatly boxed. It is more important than ever that we have a sophisticated understanding of the people and the talent that we need, and use that as the basis of our negotiations and policies.

For higher education, fears have been expressed that exit from the EU will impact universities, and this will in turn have a number of knock-on effects for the attractiveness of the UK for IT business. It will be critical to ensure that UK computing strength is supported, and that the UK’s academic computing community are able to operate on an international basis. Rather than allowing a change in European relationship to contract our vibrant and nationally-important academic computing community we need to embrace and extend international collaboration and send a clear message that this is the UK's intention.

Headquarters

The UK has historically been a major centre for global digital business, although in recent times has seen competition grow from other European countries; Ireland in particular. Access to European markets, talent, innovation, finance in an open and English-speaking country contribute to that calculus. The UK exiting the EU will affect that calculus, and it is incredibly important for the UK’s economy and global influence that these changes improve the proposition to those organisations, and is seen to do so as early as possible.

Innovation

If the UK is to be successful as a nation outside the EU in the long term, and we are able to make IT good for society, success in the digital sphere is absolutely critical. With the right relationship with Europe - on trade and data - the UK could become a very attractive place for both global digital business and for tech start-ups with global aspirations. The UK’s track record in Europe for digital innovation and leadership is second to none, and the negotiations and development of a digital UK outside the European Union means everything to play for. This needs to be at the heart of domestic government policy and a major driver behind negotiations to establish the UK’s future relationships with Europe and the rest of the world.

Where do we go from here?

This is an initial response from BCS - rather than a formal position - and we need to get together as members to better understand the issues and what we need to do. There is a major role for all of us through BCS to help guide and work with our government, our industries, our members, the sector and the general public as they seek to understand how to make IT good for society in the wake of the referendum. We'll continue to share ideas and comments, we'd love to hear from members, and we will update you on how you can take part in this dialogue and activity - that starts today, but will continue for a long time to come.

Comments (13)

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  • 1
    Jos Creese wrote on 24th Jun 2016

    A sensible and measured response, and great to see BCS moving so quickly in responding to this important topic.

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  • 2
    Graham Coyne wrote on 24th Jun 2016

    All good points.

    Now we have voted out by a narrow margin, I wonder what will happen to those British engineers who are registered on the European Engineer (EUR ING) database?

    Will their qualifications still be recognised across Europe? Or will all the Brits be chucked off the database?

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  • 3
    David Evans wrote on 24th Jun 2016

    Thanks Joss, thanks Graham. Regarding the European registers and equivalence, now the process begins to work out what it will mean. We'll no doubt be working alongside the Engineering Council and Science Council, and our fellow professional organisations to ensure the best possible treatment.

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  • 4
    Anurag Sharma wrote on 24th Jun 2016

    Very good points

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  • 5
    Rubi Kaur wrote on 27th Jun 2016

    Thanks for posting. I wonder what will happen now that Britain will not be part of the EU Digital Single Market strategy ? the proposed opening up of digital opportunities for people and businesses across Europe. Sigh :(

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  • 6
    Jos Creese wrote on 27th Jun 2016

    The tech sector could be the salvation of having decided to leave, provided:
    - our best people don't leave to work in the EU while they can
    - the tech industry recovered quickly from the market falls we saw yesterday
    - the UK gov starts diverting money into tech rather than replacing lost EU subsidies in other sectors

    Welcome views!

    Jos

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  • 7
    Adrian Firth wrote on 27th Jun 2016

    Good points very well made. But frankly a little bit late to the party - this should have been provided months ago.

    And the obvious point remains - leaving the EU is by no means a fait accompli.

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  • 8
    David Evans wrote on 27th Jun 2016

    Adrian - difficult for BCS as an independent charity to make comments that pertain directly to a vote...but we have an obligation to help in a non-partisan way. Not an easy balance!

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  • 9
    Daniel Inyang wrote on 29th Jun 2016

    I appreciate the quick response from the bcg. It shows that we are alert. On the issue of which law will we now comply with in relation to data I will be quick to say that as a British organisation we are subject first to British laws. Any other law that binds us will only be those to which UK has signed up. We do not make the laws so we keep doing what we are good at and watch our back to ensure we comply.
    Thank k you.

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  • 10
    Adrian Firth wrote on 30th Jun 2016

    Keen to see thoughts in answer to questions here, which is the question from BCS that brought some of us here:

    https://www.linkedin.com/groups/80608/80608-6152054750314536963

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  • 11
    Sam De Silva wrote on 30th Jun 2016

    In response to Daniel’s comment: unfortunately, because of the way the GDPR is drafted, if a UK based business offer goods or services to citizens in other EU countries, or otherwise monitors their behaviour or has offices in other EU countries operating central data processing systems – the GDPR will still apply to that UK business (even though the GDPR is not law in the UK), i.e. the GDPR has “extra territorial” affect.

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  • 12
    David Evans wrote on 30th Jun 2016

    EU agreements and regulations are still in force until an exit agreement which is likely to be some years hence. As Sam says, the way European data regulations (that come into force in May 2018) are drafted, they will impact UK businesses that hold EU citizen's data irrespective of whether or not the UK is part of the EU. The question I'm mulling is what, out of any negotiations, we should be asking for - which is what's really to play for.

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  • 13
    RICHARD HILLIER wrote on 4th Jul 2016

    I was disappointed that the BCS didn't come out during the campaign and give this type of assessment.

    The article is spot on with many points. I strongly agree that the BCS should push to be involved in the negotiations.

    But I think a loss of EU IT services trade - as listed in the Data & HQ paragraphs and elsewhere - is unavoidable. Even if we manage to negotiate so that we still abide by EU data protection laws and other regulations, the perception that there could be "vulnerable to international forces" and the UKs own "snoopers charter" agenda will drive business away. We have to be prepared for some narrowing of the sector..

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About the author

Thoughts on membership, the profession, and the occasional pseudo-random topic from the BCS Policy and Community Director.

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