Brexit: A Nightmare Deal for the IT Sector?
The term Brexit is an abbreviation for “British exit”. It refers to the U.K.’s decision in a June 23, 2016 referendum to leave the European Union (EU). The vote’s result defied expectations and roiled global markets. As a result, causing the British pound to fall to its lowest level against the dollar in 30 years. Former Prime Minister of the United Kingdom and the leader of the British Conservative Party David Cameron called the referendum and campaigned for the U.K. to remain in the EU. However, he announced his resignation the following day.
Theresa May replaced Cameron as leader of the Conservative Party and prime minister. Anyhow, she voluntarily stepped down as the leader if the party on June 7, 2019, after facing severe pressure to resign and failing three times to get the deal she negotiated with the EU approved by the House of Commons. The following month, Boris Johnson, who is a former Mayor of London, foreign minister, and editor of The Spectator newspaper, who is also a hardline supporter of Brexit, was elected as the leader of the conservative party and prime minister.
Boris Johnson campaigned on a platform to leave the EU by the October deadline “do or die”. He said that he was prepared to leave the EU without a deal. U.K. and EU negotiators agreed on a new divorce deal on 17 October.
The main difference from Theresa May’s deal is that a new arrangement has replaced the Irish backstop clause. The U.K. was expected to leave the EU by 31 October 2019. However, the U.K. Parliament voted to force the government to seek an extension to the deadline and also delayed a vote on the new deal. Johnson then called for a general election. In the December 12 election, Johnson’s Conservative Party won a huge majority of 364 seats in the House of Commons out of the 650 seats.
Brexit took place at 11 pm Greenwich Mean Time on 31 January 2020.
Theresa May’s Brexit deal has been damningly rejected by MPs. The scale of the defeat at 230 votes, represents the largest defeat in the history of the Commons. It left the UK’s IT industry staring a no-deal Brexit scenario in the face. Nicky Stewart, Commercial Director of cloud services company UKCloud told GlobalData, “(The outcome of the vote) doesn’t leave the tech sector any further forward. What we need now is absolute clarity on how the government intends to progress – something the digital, and every other market, sector has been asking for two years. No deal should be taken off the table now – this isn’t in anyone’s interest.”
There are concerns that freedom of movement could be restricted altogether between EU countries and the UK, as a result, making it significantly more challenging for firms in the UK to hire IT staff from the EU. As such, it is vital for businesses to keep an eye on new immigration requirements. The UK government has already carved the regulation into legal stone by transposing the rules into the 2018 Data Protection Bill. Organizations will still need to comply with the requirements of the Network and Information Security (NIS) directive ensuring essential services operators and digital service providers maintain high levels of security and resilience.
No business can afford to be using old equipment or out-of-date software especially, the IT sector. The slow-running systems will have a negative impact on productivity and can also leave firms vulnerable to cyber-attacks. However, the costs of equipment and software are likely to increase post-Brexit especially if the UK crashes out without a deal. No deal would result in tariffs on all goods entering the single market, meaning widespread price increases on tech products including Microsoft, Apple, Dell and HP.
Even if it is still unclear what the effects of Brexit will be in the short term and long term, one thing is certain that it is vital for businesses to be prepared for all eventualities.