United Kingdom is ranked second in the Global Innovation Index (GII), after Switzerland and before the USA.
In the direction of innovative economy
During last five years British economy has turned to innovation. Efforts towards creating a start-up-friendly environment, which would make it easier to establish, function, develop firms and obtain financing, have made Great Britain a startup hub in a very short period of time. United Kingdom has four of the eight best universities in the world and it not only educate but also is able to attract young and well-educated people from around the world. Interestingly, one entrepreneur in seven who set up a business in the UK is an immigrant.
The large number of entrepreneurs decides to run business in the UK also because this country is a gate to the world. It has close relations with the USA and also gives an access to the EU’s single market of over 500 million consumers. Additionally, London is a financial center and European leader in investment, what facilitates getting funding for startup companies. All that has an enormous impact on effects. From the UK comes more so-called unicorns that from Sweden, Germany, the Netherlands and France together. Among companies valued at over $1 billion are Shazam, Skrill, Transferwise, Wonga or SkyScanner.
Brexit and innovation
The Guardian asked unicorns about their attitude towards Brexit. None of them supported leaving the EU. Five supported remaining in the EU; others were neutral or declined to comment.
Brexit is perceived as a real threat for British innovation and in a broader perspective – for innovation in the EU as a whole. The first question is likelihood of British capability of retaining high position in global innovation rankings.
If Britons left the EU, uncertainty related to building its new role in the international arena would hit entire economy. In 2015 GDP growth was 2,2 percent. It will not be possible to maintain economic growth if the UK leaves the EU.
There is also another aspect of this issue. Great Britain leads the European initiative of creating digital single market within the EU. This project is one of the most promising. It is estimated that it could contribute € 415 billion to the economy. The goal is to abolish national trade barriers in respect of online transactions. In practical terms, this means harmonization of copyright and e-commerce regulations throughout the European Union. Single market would increase competitiveness and make a contribution to economic growth within the EU. That is in line with the EU’s strategy, which is focused on SMEs and on boosting competitiveness through innovations.
Digital single market plays a crucial role from start-ups perspective, because they struggle with barriers that stay in the way of benefiting from economies of scale. Although individual EU members are more willing to support new firms and it becomes easier to obtain financing, differences in national regulations impede fast growth of companies that have already been set up. Single digital market would let Europe to support initiative, which have a potential for being giants like Google or Uber.
Great Britain is an European leader in the field of innovation and its qualitative application to creating firms that offer products and services. UK is also a role model in cultural as well as business openness. Leaving the EU would result in hindering positive business trends. Why? Because the UK would need some time to regulate its economy and no one is able to identify possible direction and, what is even more important, effects of those events.
Unstable business situation would negatively affect start-up market, not only in the UK but also in Europe as a whole. Threat of Brexit is an opportunity to pay an attention to matters of single internal market, innovation, European economies and theirs potential for common development, among other things, in the area of technology.