On June 23, 2016, the United Kingdom voted by a narrow margin to leave the European Union. The morning after the vote, the pound dropped sharply, stock markets fell across Europe, and the technology industry began trying to make sense of what the decision would mean for the businesses they had built around assumptions of continued UK-EU integration.
The immediate reaction was disproportionate to what Brexit would actually mean in any short timeframe. The UK was not going to leave the EU for years. Most of the practical mechanics of operating businesses across the UK and EU borders would remain unchanged through the negotiation period. The sudden shift in market sentiment reflected uncertainty about a long process more than any concrete change in operating conditions.
The longer-term considerations were more substantive. Many technology companies had used the UK as their European base partly because of language, partly because of London’s position as a financial centre, and partly because operating from the UK gave automatic access to the broader EU market. Brexit raised questions about whether that automatic access would continue, on what terms, and over what timeline.
Talent movement was the first concrete concern. Many UK tech companies relied heavily on talent from EU countries. The freedom of movement that had supported that hiring would change. The new arrangements would not be defined for years, but the uncertainty itself created retention issues immediately. Some EU citizens working in UK tech started planning relocations. Some UK companies started planning satellite offices in Dublin, Berlin, or Amsterdam.
Investment patterns shifted gradually rather than dramatically. UK technology funding continued through 2016 and the years that followed, though at levels that would have been higher under a no-Brexit scenario. Some major investments that might have gone to London went to other European cities. Some did not, with the UK continuing to attract significant capital despite the headwinds.
What Brexit ultimately meant for the UK technology industry would not be settled for many years. The negotiation extended through 2019. The implementation continued well beyond that. The patterns that emerged were complicated. Some sectors of UK tech remained globally competitive. Others were affected more substantially by the operational complications of cross-border trade and talent movement.
The June 2016 vote was the beginning of a multi-year process whose effects would unfold gradually rather than appear immediately. The business decisions made in the weeks following the vote turned out to be premature in many cases. The slower adjustments that played out over years were the ones that mattered.