The stage has been set for a decision that will impact the U.K.’s business community for years to come. The EU referendum — confirmed for June 23rd — will determine whether Britain remains a member of one of the world’s most influential markets and whether it will continue to hold a seat at the table.
For tech firms — both in the U.K. and outside it — this undoubtedly places a large question mark over the future and feeds growing uncertainty and unrest. Consensus as to the potential implications of “Brexit” will be difficult to find amongst the trading of wild claims and statistics that is anticipated over the next few months. Nevertheless, it is vital that we start to seek clarity if the tech community is to have its voice heard in the upcoming referendum debate.
Innovation and investment
With innovation and investment at its heart, London’s booming FinTech sector has been one of the region’s greatest success stories in recent years. The capital’s unique position as a creative platform for new ideas has made London an international center for firms both large and small, most of which see the U.K. as a gateway to the EU and its 500 million potential customers.
Just last week, a report conducted by Ernst Young declared the U.K. the FinTech center of the world, beating out Silicon Valley and New York due to its deep talent pool, strong availability of capital, and high demand from clients.
I strongly believe that if we were to abandon the free movement of goods, services, capital, and people principles, all of which have been crucial to the growth of London’s tech industry in recent years, we would be putting this hard-earned status all at risk.
Leaving the EU would have very direct consequences for London’s tech industry. In the payments sector, for instance, the U.K. has been a beacon of innovation within the EU, made possible by the “passporting” of EU rules that allow a payment company authorized in the U.K. to conduct business across the EU.
A British exit would mean that payment and money transfer companies like mine will no longer be able to provide their services in the EU unless they incorporate somewhere in the EU and get additional licenses. This would undoubtedly impact the ease with which tech firms operate in Europe, in addition to imposing a further barrier to those looking to expand into the continent.
Access to funding is another issue that tech firms should be concerned about if Britain opts to leave the EU. Investment is the catalyst for innovation and is a major contributor to Tech City’s success. Being within the EU gives companies in the U.K. much-needed access to seed enterprise investment schemes and venture funding from Europe’s other financial centers, such as Frankfurt and Paris.
Disturbing this ecosystem would result in a noticeable decrease in the amount of cash available for tech firms to develop their products and services, a consideration that needs to be taken into account.
Understandably, there are concerns within the industry regarding the legislative challenges associated with working within the EU, particularly for smaller firms. However, this sentiment is felt across Europe and politicians are beginning to address these concerns.
In fact, we are on the brink of finalizing an exciting new Europe-wide project, called the Digital Single Market, that aims to ensure fair competition, data protection, better-integrated infrastructure, and a unification of digital regulations. This program has the potential to enhance the ease of doing business, reduce costs, and give startups the even playing field they need if they are to challenge the status quo.
Even the strongest advocates for Brexit admit that leaving the EU is risky in the short to medium term, and, at best, a gamble in the long run. Voters will need to weigh these risks as they make their choice.
It must be understood that London’s ability to compete with its international rivals as a global hub for tech firms will depend on whether we can continue to attract the best talent, ideas, and investment to our shores. I strongly believe that a British exit from the EU would hinder these efforts and result in slower growth, less investment, and fewer jobs.
Rajesh Agrawal is founder and CEO of Xendpay, the world’s first “pay what you want” money transfer company. Recently, he has been taken on as business advisor to Sadiq Khan MP, Labour’s London Mayoral Candidate.
This story originally appeared on Tech City News.