Google and Facebook back post-Brexit UK, but tech worries linger

Technology heavyweights are investing in Britain despite political uncertainty and concerns over skills shortages

Technology was flagged as one of the British industries that would suffer most in the wake of a Brexit vote, with almost nine out of 10 London-based tech professionals opposing an EU exit.

Several months after the referendum, however, and the sector has received a significant boost. Instead of a talent and investment flight, the capital’s status as a global tech hub has been confirmed with statements over the past week from a pair of big beasts: Google and Facebook.

Google confirmed that its enormous “landscraper” London HQ, first mooted in 2013, would be going ahead despite the vote. The company’s chief executive, Sundar Pichai, admitted to having reservations after the referendum verdict, but would not be dissuaded from establishing a new campus in King’s Cross that will house up to 7,000 employees.

Facebook followed on Sunday by announcing its own UK expansion. The social network will hire another 500 employees in the UK, boosting its British headcount by 50%, as it prepares to open new London officesin 2017.

The news has been welcomed as proof that Britain can continue to compete globally in the tech industry even if it leaves the EU. Gerard Grech, the chief executive of industry body Tech City UK, said that the moves “are a huge endorsement of the country’s attractiveness to tech companies”.

He acknowledged that other European cities, led by Berlin and Paris, will attempt to lure firms away from London by raising the spectre of post-Brexit instability, adding: “London remains the digital capital of Europe but we know that we face friendly rivalry from other European cities over the next two years. International competitiveness raises the game for the whole of Europe as we want to see more European tech companies.”

But Russ Shaw, the head of lobby group Tech London Advocates, warns that the UK ambitions of Facebook and Google could bring dire Brexit warnings to life by creating an industry-wide skills shortage. Under this scenario, Facebook and Google will hoover up the best tech talent as they expand their UK bases and the competition for personnel will be intensified if immigration curbs are imposed in a post-Brexit UK at the same time.

“The post-Brexit issue around talent has still not gone away,” said Shaw. If the UK leaves the EU without retaining freedom of movement, tech companies have warned that they could struggle to fill key engineering roles. “Perhaps the irony of all of these good news stories is that it will put even more pressure on the talent issue,” Shaw adds.

Google HQ
Google’s new HQ will be in close proximity to its existing site in Kings Cross, creating a ‘London campus’. Photograph: Bloomberg/Getty Images

For overseas companies looking to expand, particularly those that already have a European headquarters, the UK remains attractive, according to Suranga Chandratillake, a general partner of venture capital firm Balderton. But that sentiment could turn.

“The good news from Brexit is the pound is weak and so traditionally expensive UK employees are looking cheaper,” said Chandratillake. “Longer term confusion remains, however, on immigration policy and its societal impact. All of our companies employ highly diverse, critical employees from around the world. If it becomes difficult for them to live here in the future, whether legally or because they feel they are unwanted, the cheap pound won’t help.”

Shaw warns that an atmosphere of uncertainty around the government’s negotiation stance with Brussels has not helped inward investment to the UK, despite Theresa May’s insistence that “Brexit means Brexit”. He added: “I have heard that some investors have been holding back until there is clarity around what ‘Brexit means Brexit’ means.”

But recent events in other countries have left Britain looking like a comparatively safe investment opportunity. Speaking as Google confirmed the new London campus last week, the mayor of London, Sadiq Khan, said the capital welcomed all comers – and unlike Canada, which was inundated with migration queries following the election of Donald Trump, “our website is not going to crash”.

Khan told the Guardian that Google’s commitment was “an example of people still having confidence in London”. When asked directly whether Trump’s election would help attract talent to the capital, he demurred. “We’ve had a special relationship with the US, we’ve had presidents in the past who have been very familiar with the prime minister, we’ll wait and see about the relationship between the president elect and Theresa May.

“The key thing is, American businesses have great relationships with British businesses, and Americans have great relationships with Brits. Google making a big announcement in London, I think, bodes well.”

Facebook’s London office is the company’s largest engineering base outside the US, and houses the team behind Workplace, a product that lets businesses build their own internal Facebooks for employee communication. Intended to compete with Silicon Valley darling Slack, it’s one of the first Facebook products that charges users directly: fees start at $1 per employee.

Google’s campus won’t be the largest, but it will contain the first Google owned and designed building outside America. It will also host one of the UK’s biggest tech successes of recent years, DeepMind: Google’s world-leading AI research outfit. Co-founded by three Brits, Demis Hassabis, Shane Legg, and Mustafa Suleyman, DeepMind was bought by Google for £400m in 2014.

The fear among tech professionals is that a post-Brexit Britain will frighten away the skills and the money needed to ensure that more companies such as DeepMind emerge. For now, however, Google and Facebook are indicating that this will not be the case.

Contributor

Alex Hern

The GuardianTramp

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