Preserving the North West’s growing industries post-Brexit
AT A GLANCE
• Are North West growth sectors under threat from rival European cities following the Brexit vote?
• How can the region retain top talent and growing firms once Britain has left the European Union?
• What other trade opportunities are viable for North West businesses outside of the EU?
A multi-coloured truck driving through central London with ‘Dear start-ups, keep calm and move to Berlin’ emblazoned on the side signaled the start of a concerted effort to lure top UK tech businesses to the German capital.
As the uncertainty surrounding the UK’s position outside of the European Union continues, Move Commercial examines how the North West can preserve the momentum of its growing industries and ward off potential competition from continental rivals.
Words by Lawrence Saunders
It’s safe to say the UK’s tech sector isn’t particularly enamored by the prospect of leaving the EU.
Ahead of the referendum, a survey of almost 3,000 senior members of London’s tech scene found 87% opposed Brexit due to fears that it could make it considerably harder for British firms to reach customers and more difficult to find and employ essential talent from overseas.
Following the vote, these fears have not gone away and now the UK’s dominance of the industry across Europe has come under threat with cities such as Berlin, Paris, Amsterdam and Dublin hoping to entice firms to relocate.
Last November it was reported that just five London start-ups have decided to make the switch to Berlin, but a further 100 are now rumoured to be considering the move.
Berlin Partner, one of the agencies actively courting UK start-ups, is offering a business immigration service as part of its relocation package which promises to procure visas and work permits for tech immigrants within just five days.
Lower overheads, cheaper running costs and a rich talent pool are other carrots Berlin authorities have dangled in front of UK firms.
Although London is undoubtedly the UK’s leading tech hub, the North West’s offer is growing all the time and its top companies could soon become subject to overtures from the continent.
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A Tech Nation 2016 report released last February by Tech City UK revealed Manchester has established itself as one of the top five tech clusters in the UK, boasting the second highest GVA growth and a digital workforce of over 50,000.
“Berlin is making a really attractive proposition,” admits Katie Gallagher, managing director at Manchester Digital which represents more than 500 tech firms in the city.
“They’ve got grants which cover half of wages in the first year for all new staff and a handful of companies have already moved there.”
In spite of their impressive manpower, over half of the Manchester tech firms surveyed by Tech City UK cited a limited talent supply as the biggest obstacle to growth and with a possible end to the free movement of people on the horizon, the issue of accessing skilled labour has again come to the fore.
And tech isn’t the only sector hoping to continue flourishing in the North West – the region continues to lead the country in manufacturing and is the vanguard of key growth sectors including science, health, energy and advanced manufacturing.
“Ensuring the North West has access to the best talent – from Europe and beyond – is key to the future growth and success of our growing industries,” says Anne Dornan, head of innovation at Manchester Science Partnerships (MSP), which is home to 300 health, science and technology businesses.
Dornan says she is yet to see any other continental cities approach MSP customers and has in fact continued to witness a strong pipeline of enquiries for space in the region both nationally and internationally.
“Ensuring the North West has access to the best talent – from Europe and beyond – is key to the future growth and success of our growing industries.”
Gallagher, however, is adamant more needs to be done to ward off potential foreign threats to the region’s tech prosperity and is calling on the public sector to step up its plans for securing growth and to put “some real investment” behind tech skills in the region.
One growing North West company which isn’t currently considering a continental switch is Formby-based computer technology firm Extreme Low Energy (ELe), which manufactures low energy IT infrastructure for businesses and schools across Europe and, increasingly, the Commonwealth.
“I can understand why certain businesses would move to Berlin but we’re a high-tech engineering outfit and I see the North West as a strong powerhouse for manufacturing,” says Mark Buchannan, ELe co-founder and technical director.
In December ELe was named one of the UK’s first Commonwealth Export Champions as part of the CommonwealthFirst programme. The initiative was established by the Commonwealth Enterprise and Investment Council (CWEIC) to encourage more SMEs to trade with Commonwealth nations.
Although the nature of ELe’s product means dealing with emerging countries in the Commonwealth such as Nigeria makes sound financial sense, Buchannan believes more UK companies should seriously consider dealing outside of the EU – especially if the UK no longer has access to the single market.
“The easy market to go after is the EU due to the language and the distance, but actually venturing a little further afield isn’t as scary as a lot of people make out.
“Yes it’s a longer plane journey, yes there’s a different mix of cultures and you need to approach it slightly differently than just going over to Paris; but done right it can be very fruitful for UK companies.”
Buchannan’s view will no doubt please international trade secretary Liam Fox who has recently been encouraging UK businesses to seize more global export opportunities as we prepare to exit the EU.
The secretary was in Hong Kong in January to implore UK companies to do business with China through the former British colony after Brexit, stressing that the territory can provide a degree of familiarity in a less familiar market, next door to the world’s second largest economy.
Although there are positive ways for the region’s boom industries to view the UK’s exit from the EU, Gallagher is adamant that if access to European talent is lost it is inevitable that more North West companies will relocate to the continent.
“If the freedom of movement of people is stopped we will undeniably lose companies,” she says.
“However we saw some of this tourism type activity with the eight Regional Development Agencies (RDAs) in the last decade and we are going to see companies moving because they find this kind of offer very attractive, but the question is whether or not it’s going to be the right environment for a lot of businesses.
“My feeling is that we’re not going to see a mass exodus but we mustn’t sit on our laurels – we need to keep working hard to make sure the tech industry in the North West has a strong voice in the Brexit discussions.”