How Could Brexit Impact The Future Of UK Start-Ups?

How Could Brexit Impact The Future Of UK Start-Ups?

It might seem like the UK’s decision to leave the EU happened many years ago, but Brexit was less than 12 months ago, and the effect it could have on UK start-ups remains to be seen. After all, the UK hasn’t left yet, but in the post-Brexit world, we now live in we are getting a clearer image of the effect Brexit could have on UK start-up businesses.

Business and industry leaders have been very much split on the issue, Richard Branson the leader of Virgin outlined the effect on his company saying: “We’re not any worse than anyone else but I suspect we’ve lost a third of our value” and he also said that due to Brexit a deal involving 3000 new jobs had to be cancelled.

Germany also reported that five London-based businesses moved to Berlin after Brexit, although they were admittedly small businesses, this could very well be an early sign of Germany’s growing popularity as an alternative to London. And be an early sign that London won’t have the same appeal in a post-Brexit business world.

Silicon Valley Bank (a worldwide lending bank that usually works with start-up businesses) also conducted a survey of over 940 different companies that showed some interesting results. Especially that 1 in 5 UK start-up businesses would consider moving to European post-Brexit.

However, 62% of start-ups ruled out opening a European office, showing that many businesses are still content to staying within the UK. Although only 48% of the businesses surveyed said their business outlook for the next year was more positive than it was last year.

Uncertainty Ahead

But it is not all doom and gloom, the latest estimates show that the UK economy grew by more than predicted in the final quarter of 2016, with the manufacturing industry doing better than expected. Although there was a slowdown in business investment and business growth is also expected to fall by 1.6% next year.

The pound did fall dramatically after the referendum and as continued to be in a weakened state since, trading at around 12% lower than the euro. However, UK share prices have held up well showing that investors still have some confidence in the UK.

Although the high-growth research business Beauhurst showed that investment numbers in start-ups and fast-growing private companies both fell. With total investments falling by 12% in total, although it could be argued that such a reaction after such a monumental decision wouldn’t be unexpected.

Is It Too Soon To Tell?

While the early signs aren’t promising, they aren’t overly surprising, in fact, it’s exactly what many industry experts were predicting. It could also be argued that once the UK does leave the EU they will be putting a stronger focus on UK start-ups. In fact, it’s almost a guarantee that the government will be pulling out all the stops to attract new start-up businesses.

Although how exactly they will go about doing this isn’t known right now, at the moment many of the current laws and legislations are still in place. Things like EU trademarks are still valid, visas are still valid and investment schemes like the SEIS and EIS are still being supported.

However, whether schemes like that will still see support after the UK leaves the UK is all an unknown at the moment. In fact, much of what will happen afterward is all a bit of a mystery, although we can say for sure that it’s likely UK start-ups won’t have all the freedom they have currently. But the UK government will be pulling out all the stops to ensure the growth and success of UK start-ups.

The market, economy and political landscape will likely be very volatile for some time. We can see already from the dramatic drop in the pound, even before the UK as officially left, that the UK business sector is going to be very unstable for quite some time.

UK start-ups may face a more difficult challenge for the next few years, but after the UK has officially left the EU and the market as adjusted, UK start-ups could indeed thrive and be in a stronger position than they were previously. It’s going to be a difficult road ahead but there could be a lot of opportunities for UK start-ups as well.

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