Following economic disruption caused by Covid-19, 75% of London tech leaders have warned that the combination of the pandemic and Brexit will reduce access to investment capital, while 60% cited losing access to international talent following the end of the transition period as a concern.
Despite previous economic packages delivered by the treasury this year, nearly two-thirds of companies surveyed by TLA believe that the government has not done enough to protect the tech sector.
If concerns regarding investment and talent were to come to fruition following the combination of Covid-19 and a no-deal Brexit, thousands of startups based in the capital could go into administration, according to TLA.
This observation follows the highest number of UK startups for the last ten years going into administration in September.
On the flip side, over half (50.27%) of respondents said that they remained confident that the UK could remain a world-class centre for technology innovation.
“There are mounting fears that Covid-19 has dramatically impacted the tech sector’s Brexit readiness and the ability of our tech companies to source the talent and capital needed to grow, if we leave the EU under the conditions of no-deal,” said Russ Shaw, founder of Tech London Advocates & Global Tech Advocates.
“Exiting the Single Market and reverting to Third Country status for trade in services could be a significant blow for this country’s most innovative businesses.
“The tech sector is now of greater strategic importance to Britain than ever before. This government has placed future industries at the heart of its strategy to level-up the regions, economically recover from Covid-19 and define our new position on the world stage, post-Brexit. I urge officials to continue pursuing a deal on services with the EU and to safeguard the UK’s digital economy from the grim reality of a no-deal Brexit.
“I have complete confidence that Britain’s tech entrepreneurs will rise to the challenge of Brexit under the new conditions created by Covid-19. But it is critical that we work collectively on addressing the challenges that this research makes very evident.”
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“This is no longer about whether you believe in Brexit; this is about providing British tech businesses with the clarity they need to be able to operate effectively from 1st January 2021, and about ensuring that the digital economy can be the UK’s engine of post-pandemic growth.”
Andrew Roughan, managing director at Plexal, added: “The one-two punch of the Covid-19 pandemic and Brexit uncertainty has had an unimaginable impact on London’s tech sector. Although the flow of capital into London’s digital businesses has shown recovery, it is still the early-stage companies seeking funding for the first time that will suffer the most at the hands of further economic turmoil.
“While government economic support packages have been a vital lifeline for many of London’s tech companies, the long-term stability of the sector will be based on supporting early-stage businesses to ensure we do not lose a generation of entrepreneurs.”
The TLA study surveyed 238 of its network members in October and November 2020.