Quarter of tech companies in London won’t survive a no-deal Brexit, claims report
Old Street roundabout, in the area known as London's Tech City
Up to a quarter of London’s tech start-ups may not survive a no-deal Brexit, according to new research which heaps fresh pressure on the Government to finalise a trade agreement with Brussels.
A survey conducted by Tech London Advocates, the industry lobby group, found that thousands of start-ups were on the brink of administration, and concerned about the dual threat of a no-deal Brexit and the fallout from the Covid-19 pandemic.
September already saw the highest number of UK start-ups file for administration, liquidation or dissolution in the last ten years as the size and number of funding rounds slumped, earlier research has shown.
Tech London Advocates, which includes more than 9,000 start-ups and investors among its network, said 25pc of companies warned they may not survive a no-deal Brexit in the current economic climate.
Around three quarters of tech companies said they expected to find it significantly harder to raise capital in future if Britain failed to agree a trade deal with Europe right now.
Russ Shaw, founder of the industry group, said: “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.
“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.”
Mr Shaw urged 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”.
His comments come as negotiations continue between the EU and UK, with Michel Barnier this week saying that time was “short”, and that “fundamental divergences still remain, but we are continuing to work hard for a deal”.
Although an agreement was said to be “close” and “95pc” done late last week, there are still major hurdles to overcome including on key issues such as fishing and the deal’s enforcement.
Among tech leaders, one of the biggest concerns over a no-deal scenario is access to international talent, with around 60pc of those surveyed by Tech London Advocates voicing fears skilled data scientists and software engineers may be tougher to find.
The Telegraph’s Tech Hot 100 list this year showed that much of Britain’s tech start-up scene relied on international talent, with just over a quarter of the richest founders in the UK having been born overseas.