Get ready for a Brexit-linked tech invasion on our shores
Published 24/04/2016 | 02:30
What a difference a month makes. From initial panic over Brexit-spawned tariffs and border issues, it now looks like Ireland might actually benefit from it in some ways. A growing number of tech companies say they'll consider switching from the UK to another EU country - possibly Ireland - as an industrial base if Britain leaves the European Union.
"It would make sense for us to relocate to Europe," said Taavet Hinrikus, co-founder of the London-based 'unicorn' start-up, Transferwise.com. "Our biggest constriction to growth is hiring people."
Transferwise isn't alone. The chief finance officer of the British smartphone processor company ARM has previously warned of its future plans in the UK following a Brexit vote.
And 87pc of the biggest 3,000 tech companies in London say that a Brexit will negatively affect their view of Britain as a place to do business, according to a recent poll by Tech London Advocates.
If these companies are thinking along the same lines as Ryanair's Michael O'Leary, Ireland could be in line for a new wave of business investments and multinational jobs over the next 12 months.
"You'll find a lot of the British-based foreign inward investment moving to an English-speaking economy like Ireland," said O'Leary at a Dublin event held by McCann FitzGerald this month. O'Leary's assessment has been backed up by other investor voices.
"I can't see how Ireland wouldn't benefit from an increased flow of foreign direct investment in the event of the UK not being part of the EU," said Dermot O'Leary, an economist for Goodbody Stockbrokers. "If you look at reasons why companies locate in particular countries, there are plenty of reasons, but one of the biggest reasons is access to a home market. Obviously, that's the wider EU community, which falls away in a Brexit."
The rationale behind these arguments is echoed among some of the top multinational bosses. In conversation with the head of a global technology company recently, I asked what the firm would do in the event of Britain going it alone on a key piece of IT legislation.
"We would pull our services from the UK," he said, without pausing for breath.
We were not talking specifically about Brexit. But that executive left me in no doubt that Britain was not such an important country that its inclusion in the company's plans would survive major regulatory or legal changes.
For these tech companies, the issue is not Britain's position as one of Europe's biggest retail and commercial markets. It's as a place to grow a business or develop an internationally-minded base.
They need access to talent, competitive taxes and common regulation. If Britain votes for Brexit, its next two years will be a mess on at least two of these three fronts. (The UK will probably slash corporate taxes further after an EU exit in an effort to stem the worst of its corporate flight.)
Brexit fears are "having a huge impact on general confidence," said Lord Mervyn Davies, deputy chairman of the private equity firm Letterone, which has investments in Uber and VimpelCom. "What is scary for foreign direct investors, and investors generally, is the fear of the unknown."
Big companies have been thinking about this for a while. When Yahoo unveiled its new corporate headquarters in Dublin's north docklands last year, several of its executives talked about potential issues arising from a Brexit vote. Very little of the chatter was complementary to a post-Brexit Britain's chances of developing future foreign investment.
"Without any doubt, this is causing sentiment to change," said Mike Rake, chairman of BT, last week. BT has a substantial presence both in Britain and Ireland.
Even central bankers acknowledge the issue.
"It has to be the case that any sensible major firm considering where to make a location decision, if the competition is between UK and Ireland, is going to stall for a few months," Irish Central Bank boss Philip Lane recently told a Dail committee.
So is Britain mortally wounding its tech ambitions with the prospect of an exit from the European Union? And could this be an opportunity for Ireland?
One recent survey indicated that over a third of 700 British and German companies operating in the UK would consider moving jobs out of the country following a vote to leave the European Union.
Irish companies aren't blind to this.
"Almost three-quarters feel a Brexit would make Ireland more attractive for multinationals to invest," said Ruth Curran, a partner at Merc Partners which conducted a survey on the issue among 330 senior Irish executives.
So it's not just that Brexit 'Leave' campaigners, who think that big business can't avoid UK incorporation for economic reasons, are deluded.
The whole thing might automatically give Ireland a step up as the EU's only native English-speaking economy.
Sunday Indo Business