Opinion

UK and CEE tech trade is on the up, but Brexit threatens to throw a spanner in the works

Collaboration between the UK and Central and Eastern Europe (CEE) has been one of the economic success stories of the past few years. As even with slowdowns in growth in the UK economy, UK trade in tech with CEE countries has been characterised by a significant increase in both imports and exports of telecommunications, computer and information services.  

For example, UK exports of telecommunications, computer and information services to Poland increased by 50 per cent from 175 million UK pounds in 2016 to 266 million UK pounds in 2018. Similarly, UK exports in this sector from the UK to Romania grew from 71 million UK pounds to 98 million UK pounds, an increase of around 35 per cent. This positive trend is reflected across CEE, however it is not just exports from the UK to CEE that have increased but also UK imports of telecommunications, computer and information services from CEE countries. 

To take both Poland and Romania as examples again, imports of Polish telecommunications, computer and information services to the UK nearly doubled between 2016 and 2018, increasing from 115 million UK pounds to 215 million UK pounds. In the same time Romanian imports of these services to the UK also nearly doubled, rising from 94 million UK pounds to 174 million UK pounds. 

In both cases and across the region UK and CEE are increasingly doing more business together in the tech space, driven by an increase in services. While much of this growth is driven by Poland, Romania and Estonia, there are common trends across CEE that show that that CEE tech is truly on the up. 

Twelve new tech unicorns have been created in the CEE region with a combined valuation of nearly 30 billion UK pounds. These unicorns have been accompanied by a record 0.7 billion UK pounds invested in CEE start-ups in 2018 alone, and when you include start-ups that moved to the US or UK, this figure climbs ever higher, reaching a record 1.3 billion UK pounds. 

As Europe’s largest tech and financial economy, UK CEE collaboration in tech is a key driver of growth in both markets. However, Brexit poses a number of challenges that could stall growth and the deepening this partnership. 

The UK’s strength as a tech economy has been built on the ease of doing business here in the UK complemented by access to the EU market of 500 million people, a world leading financial services sector and excellent business links with the rest of the world, such as the US. 

With new innovations in fintech, it has never been easier to establish a business presence in the UK, this has been particularly valued by tech companies from CEE who have often used the UK as a base to expand their European businesses, raise funds from the City of London and look at wider international expansion. 

The UK’s departure from the EU presents a number of risks to continue business collaboration with business based in CEE, these include possible interruptions to the free flow of personal data between the UK and the EU, an end of worker mobility meaning UK workers my need visa’s to travel to CEE to perform temporary work, and an end to the free movement of people making it harder for UK and nationals from CEE countries to move live, work and study for longer periods. 

These three challenges presented by Brexit threaten to undermine UK trade and collaboration with CEE countries. In particular the threat to the movement of people would present a real challenge with CEE economies relying more and more on skilled workers being able to travel to deliver tech solutions. 

To address these issues UK and CEE governments and stakeholders need to work together so that in a deal scenario steps are taken to ensure that interruptions to data and people are avoided. 

In the UK government’s withdrawal deal with the EU the political declaration contains a number of commitments to negotiate agreements on the free flow of data and a mobility framework for workers. However with time short (if the UK government is returned after an election there will be less than a year to negotiate these agreements before the end of the transition period in December 2020), UK and CEE officials and stakeholders must work together to encourage EU and UK negotiators to come to an agreement quickly. In the event of a no deal, these time pressures will even more intense. 

techUK has already begun this work by co-signing letters with the Polish trade associate ZIPSEE Digital Poland to call for free flow of data arrangements. techUK has also called on the UK Government to secure an agreement on worker mobility and a fair immigration system for tech, so that increasingly internationally focused tech workers have the freedom to live and work between the UK and key growth markets such as CEE. 

Since the ascension of the majority of CEE countries in 2004 the UK and CEE have benefited from extensive cultural and economic exchanges. With the increasing digitisation of the economy and growing tech sectors of both the UK and CEE this relationship we must work together to ensure this relationship is not imperiled and that any change in the UK’s relationship with Europe is managed to support a new phase in beneficial UK collaboration with CEE countries. 

About the author

Neil Ross

Neil Ross

Neil Ross is techUK's lead on Brexit policy and no deal preparedness. He also supporting techUK’s work on the UK’s future relationship with the EU, economic policy on competition and innovation and techUK’s international trade policy.

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