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London’s technology and creative cluster might appear to be Brexit-proof but there is no room for complacency

by | Dec 8, 2016

A quiet revolution has been going on in Europe’s cities over the last decade or more.

A quiet revolution has been going on in Europe’s cities over the last decade or more. City office markets once focused around financial services occupiers have been gradually ceding ground to new and upcoming tech industries.  Nowhere is this truer than in London.  In 2007, the last full year before the recession took hold, office leasing in Central London by tech companies was barely a third of that accounted for by the financial sector. Wheel forwards to the last 4 quarters of data available and tech take-up has over-taken financial services. That equates to a 98% increase for tech. Add in some of the substantial increase in space taken by the co-working providers much of which is aimed at tech and the increase is even more impressive.

The tech phenomena started in the US but, as a new report from CBRE

documents, London has been the dominant player in the European tech boom. Following June’s vote to leave the EU, London’s tech sector has taken on even greater significance. London has established itself as a world leader for creative and technology-based industries, by virtue of its location, language, political and legal structures, financial infrastructure, existing business clusters and openness to global companies and global talent. London also offers a wide range of social and cultural attractions and has proximity to a number of world-renowned universities. Most of this will not change with Brexit. Technology and creative industries are, in general, not affected by regulatory restrictions or fears over single market access.  Announcements in recent months by a number of big global tech companies of further commitments to London have also gone some way to bolster the feeling that London’s tech sector might potentially be Brexit-proof.

This does not mean there is room for complacency. Before the referendum, London’s tech companies were as concerned as any about the prospect of a Brexit. Their reasons for concern, however, were different. The worry was not about market access but about the continuing access to skilled labour from other countries. Significantly, some of the big tech companies who have made commitments to London in recent months have re-iterated their concerns and there have been hints that their commitment might not be so permanent if restrictions on the type of labour that they recruit become too restrictive. The government is aware of these sensitivities and of the vital importance of the tech sector to the economy and it will go out of its way not to kill the goose that is laying the golden economic eggs. A well designed migration policy can accommodate the needs of the tech sector in various ways including a well-designed points system, a tech visa scheme” or even a “London visa scheme”. Let’s not forget though that some kind of migration policy will be central to the Government’s Brexit strategy and we should always the wary of the law of un-intended consequences.

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