On the eve of  Britain’s historic EU referendum, data center players have warned of the consequences of leaving the European Union, and 34 of UK tech leaders have signed a letter urging the country to remain. 

The UK’s data center sector leads Europe, and the country’s tech industry is a global success, but this relies heavily on the ability to sell services across the European Union, says a statement from UK industry body TechUK. Leaving would harm it, and create a lengthy and damaging period of uncertainty. EU regulations would most likely still apply, and players form outside the EU would be less likely to locate services and facilities in Britain, industry leaders have said.  

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– Thinkstock / miks

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”The UK’s tech sector is a global success. It is growing faster than the rest of the UK economy and creating new businesses and jobs across the country,” says a letter signed by 34 tech business leaders, published in the Times on Monday. “EU membership has underpinned that success. A vote to leave would undermine it.”

Tech companies are not “starry eyed”, but surveys have shown that SMEs and investors would vote to stay in, says the letter, whose signatories include the UK heads of Thales, Cogeco, HPE, Fujitsu, Virgin Media, SAP, CSC, BT, Microsoft and Accenture.

A survey of TechUK’s membership found that 70 percent wanted to remain in the EU, and only 15 percent wanted to leave. “UK tech is thriving, creating jobs almost three times faster than the rest of the economy,” said Julian David, CEO of techUK. “The vast majority of our members say that being in the EU supports that growth. Open markets and cooperation are good for business. This is not about fear, it is about opportunity – a market of 500 million consumers.”

tech uk main infographic
tech uk main infographic – TechUK

”The global digital economy is borderless by definition, and reverting to historical borders is somewhat counter intuitive in the technology industry,” Nigel Stevens, UK managing director of modular data center firm IO told DatacenterDynamics.  ”Should the UK leave the EU it is difficult to imagine how it will continue to lead the European data center market. The UK’s dominant position in the global digital economy will certainly slip as a result. It is unlikely that the financial capital of Europe will remain outside of the EU in the long term and demand in the data center market will shift elsewhere in Europe too.”

Regulations have actually been a boon, he said: ”EU data protection rules have been an opportunity for UK data centers, as global businesses have selected the region to house European citizens’ information and so remain compliant.”  Against that Stevens points out that UK data centers have had to comply with European regulations on energy efficiency and emissions. 

The incoming EU General Data Protection Regulation (GDPR) will affect British and multi-national companies regardless of the EU referendum result, since large companies wanting do business in Europe will still want to comply.  

Any relaxation of regulations would take years to “unpick” said Stevens, and the period of uncertainty would deter service providers from launching or expanding in the UK: ”The knock-on effect will be that an industry acting as a key barometer of the UK’s digital prosperity will be severely damaged.”

Other tech leaders backed the comments up, including Canonical, the provider of the Ubuntu open source operating system. “The UK will fare better, socially and economically, inside the European Union,” said Chris Kenyon, senior vice president of Canonical UK. ”We are privileged to live in a world that is increasingly integrated. Successive generations have benefitted from ever greater access to opportunities that match their interests and their aspirations. Employment conditions, safety standards, scientific advancement and economic vibrancy all improve with access to larger pools of talent and customers.”The UK has a special deal with Europe, a better deal than any other country will ever obtain, or that the UK could ever attain again.”

The techxit prospect

The prospect of tech firms relocating outside the UK has been dubbed “Techxit” and could see companies taking the logical step of moving their European headquarters, so they are still actually inside Europe. 

Already there are some signs of tech firms delaying investment in the UK pending the result of the referendum. Last week, a senior Google executive said the company is taking a “wait and see” strateg, according to the Irish Times. The company will not make any decisions about operations in the UK till it sees the results the company’s head of Ireland, Ronan Harris, said at the opening of a Google data center in Ireland last week.