Boris Johnson has been confirmed as the next Prime Minister of the United Kingdom, having beaten current foreign secretary Jeremy Hunt in the Conservative leadership vote.
Tasked with delivering Brexit – something that Theresa May proved unable to do – Johnson has vowed to leave the EU without delay on the 31 October deadline, despite many fearing that a no-deal outcome would be disastrous for the economy.
Go deeper with GlobalData
So what does his appointment mean for the UK’s thriving technology sector, and what impact do industry experts expect his plans to have going forward?
Transforming London into Europe’s tech capital
The UK capital cemented its place as the technology capital of Europe during Johnson’s eight-year reign as the Mayor of London.
When he was elected in 2008, Europe had produced just one tech unicorn (the name given to tech startups valued at more than $1bn) according to research conducted by GP Bullhound – Skype, a video telecommunications application born out of Stockholm, Sweden, and since acquired by Microsoft.
In 2014 Johnson launched the London Co-Investment Fund, pledging up to £85m of capital to fund exciting science and technology startups.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataBy 2016, London led the way for tech unicorns, having spawned 11 in total including fashion ecommerce retailer ASOS, flight comparison service Skyscanner, food delivery service Just Eat and property portal Zoopla.
“It was under Johnson’s tenure as London Mayor that the UK tech industry really went from strength to strength and is the power house it is today, so there is a track record there to suggest he can deliver what will be best for the UK tech industry as a whole,” Andrew Jervis, CEO of London-based tech startup ClickMechanic, told Verdict.
Does Brexit threaten the UK’s status?
London has continued to produce approximately three tech unicorns per year since Johnson completed his stint as Mayor of London. With 17 unicorns, London has more than double that of Stockholm, Europe’s second most successful city for tech startups.
With 26 tech unicorns across the country, the UK now leads Europe by a considerable margin.
However, it is feared that the UK’s pending withdrawal from the EU could undo the industry’s continued growth. Technology firms worry that Brexit could reduce their access to talent at a time when suitable candidates are already difficult to find.
With Johnson promising to pull the UK out of Europe regardless of whether a deal is in place, he appears to pose a bigger threat to UK businesses than Hunt did.
“We’ve seen Johnson completely unafraid to court controversy by suggesting he’d be happy to leave the EU without a deal,” Jervis said. “And if we are to believe the major Brexit think tanks out there, this could be catastrophic for all UK businesses.”
An end to the deadlock
However, with Brexit fatigue having set in after months of negotiation deadlock, the UK tech scene is split on whether Johnson’s stern attitude towards the EU’s unwillingness to renegotiate could be just what businesses need to overcome the uncertainty and finally get to work on tackling Brexit’s challenges.
“We’ve had more than enough uncertainty and delays now, and I’d rather have a set date to work to, despite concerns from some quarters about a no-deal scenario,” Lawrence Jones, CEO of cloud hosting provider UKFast, said.
“If the EU won’t play ball and we leave without a deal, we will begin the negotiations from that point with a clean slate. The tech industry needs clarity and certainty on a huge number of issues, so we can’t just keep delaying.”
Freedom to innovate
One positive resulting from Brexit is that the UK won’t be forced to follow the EU’s lead on tech regulation. Leading the way with regulations like the General Data Protection Regulation (GDPR) and the new European Copyright Directive, Europe has gained a reputation for its strict regulatory control of the technology sector.
“It’s pretty obvious that Europe is standing up when it comes to the regulatory,” former Swedish finance minister Anders Borg said at the IPSoft Digital Workforce Summit earlier this year. “When you have something new to us [Europe], we’re always trying to regulate it. In the US, they will try to make money from it, and in China they will try to copy it.
“Technology has never thrived when you try to stop it with regulation. It’s when you allow it and you go for the entrepreneurial approach that you really get technological progress.”
Ripping up regulations that took years to implement and handing tech giants the freedom to innovate would be a big job to pull off, particularly while the UK is still trying to find its feet without the EU’s support. However, the new Conservative leader has never been afraid to break the rules, and it isn’t difficult to picture Johnson’s Britain as a testbed for delivery drones, flying taxis, and robotic workers.
Mike Cohen, CEO of IT solutions company Evaris, told Verdict that Johnson’s willingness to try things that other politicians perhaps wouldn’t could provide the tech sector with a welcomed boost:
“I believe Boris is more forward-thinking than many previous PMs and this should bode well for the tech sector.
“He is business-friendly and not afraid to try different methods to determine alternate outcomes – not something that can be said of many political leaders over recent years of any political party.”
An end to big tech tax breaks
Johnson has been vocal against the current tax arrangements for big technology companies, who are known to pay miniscule amounts in sales tax compared to the amount of revenue they generate in the UK.
Apple’s UK division, for example, was found to have paid just £3.8m in sales tax in 2018, despite earning £1.2bn in the market. That is just 0.3%, far less than the UK’s standard rate of 20%.
Facebook paid £15.8m on UK revenues of £1.3bn, also equal to a rate of around 0.3%, while Google’s UK arm paid out £65.3m – 40% more than in 2017, but still a rate of just 4.6%.
Companies get away with paying below the rate by paying taxes on their operations abroad, in places such as Ireland where corporate taxes are lower.
Speaking at a leadership rally earlier this month, Johnson claimed that it is “deeply unfair” for high street businesses to be “paying tax through the nose”, while internet giants are “paying virtually nothing”.
According to Jones, who attended a meeting with Johnson in the run-up to his announcement as the new Conservative leader, Johnson acknowledged that current tax arrangements leave UK-based businesses at a disadvantage.
However, he also believes that he’s the right person to find a solution that will benefit UK tech, UK business and the UK public.
“I’m confident that he’s the right man to try and finally remedy that issue and create a level playing field for British businesses which ultimately means more money for the British people, and more opportunities for our businesses to compete,” Jones said.
Read more: Pro-Leave areas at highest risk of automation, making retraining vital to post-Brexit Britain
