Rajesh Agrawal is founder and CEO of Xendpay, the world’s first “pay what you want” money transfer company. Recently, he has been taken on as business advisor to Sadiq Khan MP, Labour’s London Mayoral Candidate. Here, Rajesh explains why London’s tech sector is best served by Britain remaining a member of the European Union.
The stage is now set for a decision that will impact the UK’s business community for years to come. The EU referendum, which is now confirmed to be held on 23rd June, will determine whether or not Britain remains a member of one of the world’s most influential markets, and whether Britain holds a seat at the table which governs it.
For tech firms, in and outside the UK, this undoubtedly places a large question mark over what may be in store and uncertainty has already started to creep into the industry. Clarity on the potential implications of “Brexit” will be difficult to find amongst the trading of wild claims and statistics anticipated over the next few months. Nevertheless, it is vital that we start to seek this clarity if we are to have our voice heard in the upcoming referendum debate.
Innovation and investment
With innovation and investment at its heart, London’s booming FinTech sector has been one of our greatest success stories in recent years. The capital’s unique position as a creative platform for new ideas has led to London becoming an international centre for firms big and small, most of which see our position within the EU as a gateway to 500 million potential customers.
Just last week, a report conducted by Ernst Young declared the UK the FinTech centre of the world, beating Silicon Valley and New York due to its deep talent pool, strong availability of capital and high-demand from clients.
I strongly believe that if we were to abandon the free movement of goods, services, capital and people principles, all of which have been crucial to the growth of London’s tech industry in recent years, we would be putting this hard earned status all at risk.
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Leaving the EU would have very direct consequences for London’s tech industry. In the payments sector, for instance, the UK has been a beacon of innovation within the EU made possible by the “passporting” of EU rules which allows a payment company authorised in the UK to conduct business across the EU.
A British exit would mean that payment and money transfer companies like mine will no longer be able to provide their services in the EU unless they incorporate somewhere in the EU and get additional licenses. This would without doubt have an impact on the ease of tech firms operating in Europe, in addition to imposing a further barrier to those looking to expand into the continent.
Access to funding is another concern that tech firms should be concerned about if Britain opts to leave the EU. Investment is the catalyst for innovation and is a major contributor to Tech City’s success. Being within the EU gives companies in the UK much needed access to seed enterprise investment schemes and venture funding from Europe’s other financial centres such as Frankfurt and Paris.
Disturbing this ecosystem would result in a noticeable tightening of the cash floating around for tech firms to develop their products and services, which is a consideration that needs to be taken into account.
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Understandably, there are concerns within the industry regarding the legislative challenges associated with working within the EU, particularly amongst smaller firms. However, this sentiment is felt across Europe and the politicians are beginning to address these concerns.
In fact, we are on the brink of finalising an exciting new Europe-wide project, named the Digital Single Market, to ensure fair competition, data protection, better integrated infrastructure and a unification of digital regulations. The introduction of this programme will increase the ease of doing business, reduce costs and give start-ups the even playing field they need to challenge the status quo.
Even the strongest advocates for Brexit admit that leaving the EU is risky in the short to medium term, and at best a gamble in the long run. Voters will need to weigh this up as they make their choice.
It must be known, however, that London’s ability to compete with its international rivals as the global hub for tech firms will depend on whether we can continue to attract the best talent, ideas and investment to our shores. I strongly believe that a British exit from the EU would hinder these efforts, and result in slower growth, less investment and fewer jobs.