Brexit - Using UK’s tech excellence to power Britain back to growth
UKDCIG is working closely with techUK who are taking a leadership role in managing the Brexit process on behalf of the Data Centre Sector.
The UKDCIG will keep all members appraised of the priorities and progress. Please monitor this page for updates or contact Simon Allen (Membership Secretary) if you have any questions or concerns that you'd like raised.
Brexit: techUK response to triggering Article 50
techUK has previously set out its priorities for the negotiations and has published a response to yesterday’s development that welcomed the Prime Minister’s statement that any new trade deal must cover: “sectors crucial to our linked economies such as financial services and network industries”. It is also clear from discussions that Government is conscious that digital technology plays a ‘very important role for a wide range of industries’ and wants to ensure the ‘bold and ambitious free trade agreement’ they are seeking addresses issues of relevance to the tech sector.
techUK has also launched a paper on migration which explores how tech can improve the existing system for non-EU migrants and ensure that access to EU and international talent is protected throughout the Brexit negotiations. Please get in contact for more
Today the Prime Minister, Theresa May, started the process of Britain leaving the EU.
The Prime Minister’s Letter
In her letter, hand delivered to Donald Tusk, the President of the European Council, by the UK’s Permanent Representative in Brussels, Sir Tim Barrow, the Prime Minster said:
“We [the UK] are leaving the European Union, but we are not leaving Europe – and we want to remain committed partners and allies to our friends across the continent.”
The letter took a pro-business tone, and explicitly referenced the importance of ‘Network Industries’ stating that any new Trade Deal must cover:
“sectors crucial to our linked economies such as financial services and network industries.”
From our conversations with Government we understand that they are conscious that tech plays a ‘very important role for a wide range of industries’ and that they want to ensure the ‘bold and ambitious free trade agreement’ they are seeking addresses the issues of relevance to the tech sector. techUK strongly welcomes this sentiment.
The tone of the Prime Minister’s letter was a positive one. She talked about joint cooperation and recognised that there will be consequences for the UK from leaving the EU. It showed that the Government is now focused on working in a positive way to secure an agreement.
Of course, this letter is just the start of the Brexit process. The UK and the EU now have just two years to reach a deal on our future relationship. So, what are the next steps, and what should the tech sector be looking out for as the negotiations progress?
A Hard, but Fair Negotiation
These negotiations are likely to be hard fought. There are strong views on both sides, and both the UK and the EU negotiators have a constituency behind them with very high expectations for any deal.
However, it is vital that, despite the difficult discussions ahead, the UK and EU negotiators come together in order to deliver a deal that is in the best interests of everyone. That is why techUK CEO, Julian David, has called on both parties to enter the negotiations in the spirit of partnership and mutual respect. The Prime Minister has set the right tone in her letter triggering Article 50, but continuing in the same manner over the next two years will be much more challenging.
techUK has already set out our key priorities for negotiations. Given the importance of the tech sector to almost every aspect of our economy, our businesses and our daily lives, we have been clear that a good deal for tech is a good deal for the UK.
What Happens Now?
Now Article 50 is triggered, the next most significant event will come sometime in the next 48 hours, when the EU’s Chief Negotiator, Michel Barnier, presents his draft guidelines for the negotiations.
These guidelines will set out how Mr Barnier intends for the EU to approach the negotiation process, and will provide the first real insight into how the EU plans to deal with Brexit.
The first key issue for the EU is likely to be the sequencing of the negotiations. Mr Barnier has said that the two-year Article 50 process should be focused exclusively on the ‘divorce’ aspect of Brexit. These discussions will primarily focus on money and how much the UK should pay the EU for their outstanding commitments such as pensions and budget agreements. Other issues of ‘divorce’ may include the future of those EU citizens living in the UK (and vice versa), and even a timetable for a transitional deal.
The guidelines will likely make clear that the EU does not want to even discuss any future relationship, such as Free Trade Deals, until after these questions are done and dusted. German Chancellor, Angela Merkel, has already supported this approach, saying today that the negotiations must first:
“clarify how we will disentangle our interlined relationship... only when this question is dealt with, can we, hopefully soon after, begin talking about our future relation.”
The UK has a very different view, it wants to see parallel discussions on the ‘divorce’ and ‘future relationship’ aspects of Brexit. Who wins this early skirmish will be important in setting the scope and tone for the rest of proceedings.
The guidelines are also likely to set out an ‘open’ approach from the EU whether Barnier’s team will seek to provide papers and policy detail in and around the negotiations in order to keep people informed of their intentions. This approach partly comes out of necessity- the EU isn’t great at keeping information secret- but is also based on their approach to past trade deals. The EU has learnt from the experience of the TTIP negotiations with the USA, where attempts to keep information secret lead to, in the EU’s view, damaging scare stories and rumours.
Again, this open approach is likely to differ from the UK Government, who have consistently said they will “not provide a running commentary” on the negotiations. However, this stance has softened in recent months, with David Davis committing to give Parliament as much information as possible without damaging the Government’s negotiating position.
Once Mr Barnier’s draft guidelines are published, they will be approved by the European Council – the collection of EU Member States on the 29th April. Understanding the EU’s final approach to the negotiations will be an important part in understanding any future deal.
Time to Talk
The other key event that can now occur is that the UK can begin to talk to EU officials and their counterparts in Member States. Previously the EU have been very disciplined in refusing to engage with the UK on Brexit until after Article 50 was triggered. That means that, while both sides have done preparatory work, this is the first time they are able to sit in a room and size up the other sides plan.
The UK’s negotiators will now begin the process of setting up meetings with counter parts to understand areas of common ground and to get a sense of where issues of real disagreement may lie.
One of the top priorities for an early deal will undoubtable be the future of those EU citizens living and working in the UK and those UK citizens’ resident in the EU. Many had urged for a unilateral decision to protect the rights of these groups for the future even before the negotiations began, however, this has failed to materialise, in part because of pressure from those already living abroad for neither side to make a unilateral offer.
However, both the UK and the EU have been clear they want a very early agreement on citizens abroad. techUK strongly support the intention for a rapid agreement in this area, helping provide stability to EU citizens working in UK tech firms,and vice versa. Movement of talent between the UK and continental Europe is vital to the fast-paced and dynamic nature of the tech workforce. Ensuring in particular that the temporary movement of workers on a short term basis is still available during and post Brexit negotations will be critical to the growth and sustainability of a number of tech companies in the UK.
Negotiating on Negotiations
One potential difficulty for the negotiations is the electoral cycle of key EU Member States. Making sure that the ‘big beasts’ of the EU Council are supportive of the decisions taken by negotiators will be vital- and that means knowing who they are.
Most important to this is the German Presidential elections due to take place on 24th September. Germany the most influential Member State and Angela Merkel is the longest serving EU leader, having held office since 2005. While she is highly likely to retain her position as Chancellor, domestic politics in Germany will shape their approach to the negotiating process.
This electoral timetable means that any real negotiations on substantive issues of policy are unlikely to start until the beginning of October.
While it’s not yet clear exactly how this will impact the process, it would be fruitful for the UK and EU to use the period until October to ‘negotiate on the negotiations’. This time could be used to put in place a framework for the negotiations, and timetables to be met before the key date of March 2019. For the tech sector, this use of time would be valuable in helping provide clarity and certainty to the potentially tumultuous Brexit process.
We Don’t Go Until We Go
Once the negotiations are properly under way we are likely to see more about the proposed timetables for various key decisions. However, one thing to remember throughout the entire process is that, until March 2019, the UK remains a part of the EU. That means that EU rules and regulations will still need to be abided by and in many cases transposed into UK law.
The next year will be crucial for many key elements of European digital policy, such as the mid-term review of the Digital Single Market in May, that will include major steps on issues affecting copyright and platforms. The good news is that the UK is wel placed to influence these debates, with key UK MEPs taking the lead, including Vicky Ford MEP who Chairs the Parliament's Internal Market and Consumer Protection Committee.
For tech, one key example of the General Data Protection Regulations (GDPR). The Government is committed to fully implementing the Regulations in time for 25 May 2018, a move welcomed by techUK. Similar rules and regulations will also continue to flow. How the UK keeps up with this moving target of regulations will be a key part of the process for the Great Repeal Bill, the White Paper on which will be published Thursday.
Continuing to be part of the EU until March 2019 also means we remain limited in our ability to make agreements with other, non-EU countries. The European Parliament has been clear that this doesn’t just cover trade deals, but also any discussions about future regulation in which the UK still has a hand in shaping EU policy. This will impact on many issues facing tech, including any potential agreement with the USA.
The Real Deadline
The process for Article 50 means that, come 29 March 2019 the UK will be out of the EU. However, big questions remain as to when the actual deal must be reached.
Given the need for approval by EU Member States, as well as the likely need for approval by the European Parliament, the idea of running negotiations right up to the wire seems unlikely. Michel Barnier has said that he wants the negotiations to conclude by October 2018, and this has been echoed by EU Member States and the European Parliament.
On the other hand, there is still likely to be plenty left to do after March 2019 has passed. There will be outstanding questions as to what, if any, transitional arrangements may be in place as well as a whole number of outstanding regulatory and procedural issues.
In either case, for the tech industry, and for UK business as a whole, securing clarity and certainty about what comes next will be at the heart of retaining the confidence needed to continue to trade, invest and grow.
A United Industry
techUK has already been working to with our partners across Europe to ensure that the tech industry works together for a deal that works for tech businesses across Europe.
In recent weeks techUK and DIGITALEUROPE hosted a major internal summit in London to discuss the issues facing the tech sector in Europe and across the world. The event brought together 22 national trade associations from Europe, alongside American counterparts and involved discussions with senior Government Ministers, including Minister for Exiting the European Union, Robin Walker MP.
The message from the summit was clear. As the Incoming Director General of DIGITALEUROPE, Cecilia Bonefeld-Dahl said:
“The UK’s exit from the European Union is going to affect digital economies across Europe and it is critical that we have smooth processes that work in the interests of the tech sector and society as a whole.”
techUK has also been engaging with Ministers and politicians in both the UK and the EU to ensure that this message is heard. We recently hosted the first hearing in the European Parliament. We have also given evidence to several UK Select Committees on the impact of Brexit on the tech sector, including the House of Lords’ Home Affairs Sub-Committee and the Lords Economic Affairs Committee.
Continuing this work will be vital in ensuring that tech remains a top priority throughout the negotiations to come.
Your views important needed for dialogue with Government
- techUK is currently in discussions with Treasury, Cabinet Office and BIS on how best to respond to the impacts of the Brexit. Data centres are a prominent part of this discussion. This can be can anonymise. It cannot be emphasised enough how important it is that we provide first-hand accounts and testimonials from those within the industry of our concerns at this critical point in dialogue with government.