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Industry responds to Brexit vote

Economist brexit

The UK voted to leave the European Union yesterday and the rush is now on to anticipate the business implications of this momentous event.

Prior to the vote the consensus across industry seemed to be that leaving the EU would be bad for business. On top of the guaranteed uncertainty resulting from such a move, the concern focused on the renegotiation of trading agreements and the potential loss of some of the cross-border business arrangements currently in place. Accordingly much initial industry comment was negative.

For telecoms, however, sentiment was a bit more nuanced, with the fact that consumers tend to engage with operators on a national level being a factor mitigating the effects of Brexit. The main uncertainty is thought to be around regulation, which tends to happen on a pan-European basis in telecoms, especially the drive to abolish roaming charges. No, in theory, UK MNOs have the option to restore them, but they will need to be sensitive to the views of their subscribers on this matter.

Here’s a collection of comments from telecoms, IT and broader industry.

 

European Commission joint statement

“In a free and democratic process, the British people have expressed their wish to leave the European Union. We regret this decision but respect it.

“This is an unprecedented situation but we are united in our response. We will stand strong and uphold the EU’s core values of promoting peace and the well-being of its peoples. The Union of 27 Member States will continue. The Union is the framework of our common political future. We are bound together by history, geography and common interests and will develop our cooperation on this basis. Together we will address our common challenges to generate growth, increase prosperity and ensure a safe and secure environment for our citizens. The institutions will play their full role in this endeavour.

“We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty. We have rules to deal with this in an orderly way. Article 50 of the Treaty on European Union sets out the procedure to be followed if a Member State decides to leave the European Union.

“We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union. Until this process of negotiations is over, the United Kingdom remains a member of the European Union, with all the rights and obligations that derive from this. According to the Treaties which the United Kingdom has ratified, EU law continues to apply to the full to and in the United Kingdom until it is no longer a Member.

“As agreed, the ‘New Settlement for the United Kingdom within the European Union’, reached at the European Council on 18-19 February 2016, will now not take effect and ceases to exist. There will be no renegotiation.

“As regards the United Kingdom, we hope to have it as a close partner of the European Union in the future. We expect the United Kingdom to formulate its proposals in this respect. Any agreement, which will be concluded with the United Kingdom as a third country, will have to reflect the interests of both sides and be balanced in terms of rights and obligations.”

 

Askar Sheibani, Comtek CEO

“Britain’s departure from the European Union is a devastating blow to UK businesses, especially those in the technology industry. Words cannot describe how disappointed I am that the British public turned its back on the EU; choosing years of economic uncertainty over being part of a thriving economy that has helped Britain to progress phenomenally in terms of trade, competition, employment and skills. Brexit has riled up the business community and, as a member of that community, I’m sure I speak for the vast majority when I say that we’ve been left with many unanswered questions.

“With all existing EU agreements and laws up for debate, the UK Government needs to provide UK businesses with clarity and reassurance on the status quo, the near and the longer-term future, to avoid destabilising the country even further.  Trade agreements, for example, need to be re-negotiated in a way that boosts UK businesses and the UK economy.  Already, there has been fluctuation on the value of the pound and this is something that needs to be counterbalanced, if it’s not to cripple the UK’s ability to trade profitably in an international market both now and in the future.  What’s more, many companies based in the EU will be looking to attract agile UK-based firms, such as those in the technology industry.  With the advantages of a single market across the water and possibly a weakening UK economy at home, it will be no surprise that some firms seriously consider a shift in focus, potentially turning Techxit into a reality.

“Critically, now Brexit has become a reality, changes are on the way and no-one knows quite how they’ll impact one another, or indeed, how deep the knife will cut.  Brexit is like a gaping wound that will take years to heal and no-one truly knows the scarring it will leave behind.”

 

Jean-Benoit Berty, EY’s UK Technology, Media & Telecommunications Leader

“In the short-term, we’re likely to see a negative impact on the advertising market, but this will mainly reflect downbeat investor sentiment rather than a structural, long-term hit. However, many of the UK’s media and entertainment sectors currently generate over 50% of revenue from exports to Europe, so it will be important to look out for any changes to trade agreements in these areas closely. It also remains to be seen whether global media powerhouses with European or international operations based in the UK will relocate if it becomes more cost effective to operate within the EU.”

 

Mike Laven, CEO Currencycloud
“There’s no doubt that the nation’s decision to leave the EU has major macro-economic implications – Negotiations will be long and ongoing – and this uncertainty alone means we can expect significant volatility ahead.

“However, London’s advantageous time zone, strong financial history and FX expertise aren’t going to disappear overnight. Somewhere else in Europe being a global financial capital. Seriously?  It took decades to develop the infrastructure of firms, services, lawyers, insurers, intermediaries, and myriads of financial niches and massive personnel base that makes London special. Talk to European tech entrepreneurs and they are concerned about being cut off from London’s resources. Will it get more difficult—of course.  But with our contingency plans in place we’ll avoid the doomsday scenarios.”

 

Michael Kent, CEO and founder of Azimo

“We’re disappointed that the British electorate has decided to leave the European Union. Here at Azimo we passionately believe that the world needs less borders not more.

“As we’ve said before, this is also a blow to London’s financial services industry: many companies here depend on both EU market access and the ability and legal right to passport their services to the rest of Europe. I anticipate that we’ll see many finance players moving some, or potentially all, operations to elsewhere in Europe. Frankfurt, Amsterdam and Dublin are all obvious candidates.

“As an entrepreneur, the most difficult part about this entire debate and vote has been the uncertainty it has created. Even now that we know that the final decision is to “Leave” the European Union, we do not know how this is going to evolve in the next few months and it could even take years. We’re not worried about our business. We’re in a unique position as a well funded start-up to be able to respond to changing market conditions quickly and easily.

“The good news is that the FinTech industry is thriving across the whole of Europe at the moment, should London’s position as the heart of European FinTech now change as a result of this vote. In the meantime, we’ll continue to focus on doing what we do best: delivering better faster and lower-cost money transfers to help our hardworking customers create a better life for themselves and the world around them.”

 

John Newton, Co-founder, CTO and Chairman of Alfresco

“We recognise that the will of the British people has spoken. We will continue to need people to sell, market and support our product and we hope that favourable market conditions prevail as we plan for our future to support our European customers. At this point, we will also need to review expanding our position in the US market and growing outside the European Union.”

 

Matt Hunt, CEO of Apadmi Enterprise

“The UK and EU are markets that have continued to offer tech businesses huge growth potential and the international business community has been overwhelmingly supportive of our industry. Technology does not observe boundaries and we have been lucky to enjoy an inspiring array of tech from the UK, Europe and even further afield, which we have been able to access and use for the benefit of our customers. The UK tech industry has been in a strong position and the only limitations we’ve faced to do business has been our own ability. With the impending Brexit, there is now a high level of risk and uncertainty over our future and questions are being asked as to how will we be able to build on our success and further grow without the support of the EU.”

 

Bhuwan Kaushik, CEO of Spectromax

“The impact of the Brexit will be sizable and long term. There’s a huge IT skills gap in the UK and it’s going to take a number of years to close it. Leaving the EU at a time when the UK is in need of skills will be a huge blow to UK businesses, let alone the commercial opportunities that may be lost and could consequently stunt UK start-up growth.

“Businesses like ours are doing all we can to generate skills within the local economy through training programmes. The Government too is intending on allocating funds to formal qualification programmes following the Budget announcement. It will take time, however, for these to begin closing the skills gap and Brexit will only worsen the situation.”

 

Samantha Hurley, Operations Director at the Association of Professional Staffing Companies (APSCo)

“Britain has decided that the EU experiment, with its expansion into social and employment policy, hasn’t worked for this country, with 51.9% of the electorate voting to leave the Union.

“At this early stage, there is little detail on how Brexit will affect the regulation of the professional recruitment sector. However, this result brings the possibility that the Agency Workers regulations (AWR), and other inappropriate EU-derived legislation, could, at some stage, be reformed.

“Outside of the EU, UK courts will, in theory, have more latitude for interpretation to ensure that ‘one size fits all’ policy is reconsidered. While we strongly support the belief that potentially vulnerable workers should be protected, current rules focus on protecting lower skilled, lower paid workers and are of little benefit to professional contractors.

“APSCo will, of course, be working closely with Government regarding any changes, and will keep members abreast of all developments.”

 

Mark Mitchell, CEO of Meridian Business Support

“The result is shocking and it’s a sad day for the UK. We now face a level of political instability and an uncertainty over who is going to be the next Prime Minister.

“As a country we will become less relevant. In the years to come, I expect we will experience a significant lack of investment in major industries as other countries won’t want to trade with the UK. Brexit means we are isolating ourselves and we may not seem favourable to other countries.

“The result makes us appear to be less friendly and tolerant and has turned many of our workforce into official immigrants than colleagues – this will have a detrimental effect on staffing.

“Brexit will have a major impact on start-ups and businesses. The economic impact will be damaging as we have cut ourselves off from a valuable source of skilled labour and we may have cut ourselves off from the single market. It’s going to take a lot of time, money and effort in order to get new trade agreements up and off the ground. But we have to respect the vote, and get on with it.”

 

CP Gurnani, CEO & MD, Tech Mahindra

“There remains a possibility that future treaties with EU may not be as favourable for Britain. The remaining nations may also grow slightly insular towards Britain, which can be viewed as an added opportunity for India, given the size of our economy, demographic dividend, the quality of talent available and such other.

“To put  things in perspective:

  1. Indian FDI to Britain is high, and ranks an overall third
  2. Outward Direct Investment from India has simply doubled from 17.1 billion USD in 2008- 09 to 36.9 USD in 2013-14
  3. Presently, there are 800 Indian companies in UK, employing 110,000 people, including the very large IT companies
  4. UK would be less dependent on high-skilled labour movement across the EU, and be more open towards non-EU countries like India. It would also mean less obligations to adopt to the restrictive EU data localization norms.

“With the referendum passed in favour of Brexit, those Indian companies which are currently headquartered in London, may have to  look at Europe from a  different standpoint. It has not been easy for India to negotiate with the EU in recent years, and the dialogues have often reached an impasse.

“The question remains, will UK-India trade benefit,  if the two countries have the freedom to negotiate FTAs on their own terms – that remains to be seen. Britain, outside of EU can then be seen as an independent market with a renewed focus to build scale.”

 

Dan Tench, Head of Public Law at Olswang

“Today will be a day largely of shock for the business community as it begins to take stock of the referendum result.  Ultimately, the outcome could have very significant legal consequences for business, but these are a long way down the track.  The most likely immediate effects on businesses will be economic and in respect of investment and the value of sterling.  We have identified ten issues for our clients to start to consider today ranging from these economic effects to their contractual position to the potential changes in substantive law.  But with the political situation so uncertain, this remains very much a watching brief.”

 

Ronan Kelly, Adtran CTO

“The UK will have to be at the pinnacle of the digital society to overcome the challenges of being outside the EU, and accelerating the current G.fast deployment plans represents the fastest available path to digital leadership for the UK.”

 

Richard Dorf, CEO at PXtech

“My view is that this is not the result that we and most people we do business with would have wanted. I was speaking to our Japanese business partner this morning who saw a likely impact on global markets from our decision including negative impacts for the Chinese and Japanese economies. A reminder of how closely we are linked to the world economy and how closely linked it is to us. Independence doesn’t seem to be the word defining our future, more a different sort of dependency, an undefined dependency.

“We will be free to negotiate our future in many ways, but that is all, free to negotiate.  Negotiation is a product of the discussion of the needs of two or more parties all of whom will be operating through self-interest. So we must prepare hard to negotiate and the best way to do that is to understand the needs of those we are to negotiate with as well as our own needs. When we understand their self-interest, then we will be well positioned to help them understand that trading with the UK is key to them. Assuming because we are a “big” economy and therefore they will come to us on our terms will be a mistake. The UK has a history of diplomacy, this will now be put to the test.

“However with all change comes opportunity as well as risk. Like all good businesses, we will look to make the most of those opportunities, by making our solutions and services more important than ever to the success of our customers and partners. As always the organisations that understand and react to this will be the ones that will be successful. We at PXtech are determined to be one of those organisations.”

 

Andrew Ferguson, editor at thinkbroadband.com

“With the UK public voting to leave the EU there is unlikely to be any immediate changes in terms of the rules governing broadband procurement i.e. Superfast Broadband projects, the existing rules stay in place until the exit process has completed, and this looks to be over two years away now. The resignation of the current Prime Minister means we need to wait for a new one to enter office to make the formal Article 50 request to leave and the subsequent negotiations.

“Those who travel a lot and welcomed the mobile roaming charge changes may or may not suffer but it may be a more fragmented market with some providers keeping the changes in place and others looking to exploit the ability to extract more cash from us when we travel.

“For the UK broadband landscape, it is the reaction of the stock market that may be more important than the removal of any EU regulations and this may mean a period of uncertainty and with the UK just embarking down a period of rapid roll-out of ultrafast broadband a further period of austerity would affect both large and small investment decisions.

“The broadband revolution has removed many barriers to international business and communication so the position of the UK in the global digital economy will now be very dependent on how the UK Government negotiates trade agreements.”

 

techUK CEO Julian David

“Today the British public has decided that the UK should leave the European Union. This is not the outcome that the majority of techUK members were hoping for. It opens up many uncertainties about the future. However, the UK tech sector will play its part in helping the UK to prepare, adapt and thrive in a future outside the European Union.

“Today, just as it was yesterday, the UK remains a great place to start, locate and grow a tech business. It is full of talented, skilled and passionate people with the ideas and creativity to make great things happen. Its consumers are eager and enthusiastic early adopters of new technology. Its world class universities are powerful engines of science and innovation and its politicians and regulators have a strong record of supporting market-led investment. We must now harness these assets like never before and build a world-beating ecosystem for tech that continues the great British tradition of inventing the future.

“Today, at techUK we start work with our members to map out this new future. There will be a long to-do list with many policy and regulatory issues requiring urgent action. Tech companies will need to come together and speak with one voice to ensure their needs are understood and acted upon. To succeed, the UK tech sector needs great people, great infrastructure, world-class science and research, unfettered access to global markets, and a world-class smart and predictable regulatory environment. Without the benefits of EU membership, the UK needs to be at its very best to succeed. That remains our purpose. To make the UK the best place in the world for tech.”

 

Alan Duric, CTO and founder of Wire

“Britain’s decision to leave the EU is a momentous one, and one that could have serious implications on the future of UK technology companies. The freedom to manage data across the EU, irrespective of country borders, has accelerated growth in the ‘digital single market’ immeasurably and it would certainly be damaging for the UK to no longer fall under this agreement.

“Speculation has surrounded the intricacies of data protection in the lead up to the referendum, specifically about the General Data Protection Regulation (GDPR) that is due to be implemented in April 2018. Security experts believe that in a similar vein to Norway and Switzerland’s relationship with the EU, if the UK is to continue to access EU citizens’ data, then the same regulations would have to be met regardless of the UK’s membership status. Adhering to EU standards would not only enable the free flow of data to continue but would protect people’s right to privacy and therefore is a decision to be embraced.”

 

Philippe Gelis, CEO and co-founder Kantox

“Despite the endless headlines about Brexit, the reality is that many people were not prepared for this scenario. In this respect, this looks like the worst planned Referendum in history – not in terms of the vote or the campaigns, but because no one really knows or prepared for the actual implication of the result.

“We cannot be naive: what we are facing here is not an only-British issue, but a European one. Spain is having a General election vote in two days. Everything is connected. We’ll soon discover how today’s result will affect them. Businesses operating on a European level need to brace themselves for continued volatility that can be expected to continue for many months, if not years, to come.

“In terms of foreign exchange, it looks clear that markets will overreact in the short-run. We have already seen GBP drop to its lowest level since 1985. Some analysts point out that the markets could suffer a devaluation of 20%. Today’s world economy is global, and the exit of UK will affect every currency. Especially, the USD, whose relationship with the EUR and GBP is very narrow. The GBP’s stabilisation will depend on the announcements disclosed in the following months, and the agreements reached (and the way those affect the different industries exposed to GBP, including investments and external trade.”

 

Alberto Saravalle, partner at BonelliErede

“Brexit will have far-reaching political, economic, social and legal implications, the extent of which remains to be seen. In the short term it will have an impact on the financial markets that may have lasting repercussions. It may also have an impact on pending contracts: some may be terminated on the basis of a material adverse change, access to financing may be more difficult, etc.

“Finally, each group operating in or from the UK will need to reconsider its corporate structure, its tax position, and to what extent it benefits from the current EU rules on free movement, to name just a few key points. The main problem is that many groups will not be able to wait to see how the negotiations between the UK and the EU unfold before they are forced to make difficult decisions.”

 

ISPA Secretary General Nicholas Lansman

“The UK has entered into a new chapter in its history following the result of the EU membership referendum. There are clearly a number of significant questions and issues that will need to be addresses in the weeks, months and years ahead.  ISPA will work with its members and Government to fully understand what Brexit will mean for the sector.

“The EU is responsible for a considerable amount of regulations affecting the Internet and technology sectors and it remains to be seen what the full ramifications of this. To name a few, this could have an impact on the future regulation of data privacy, public funding for broadband, surveillance powers and the future of the Investigatory Powers Bill, consumer regulation and the future of the Digital Single Market.

“The UK has a world-leading digital economy, ensuring this is maintained should be a priority as industry and government respond to the new UK landscape.”


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