Brexit 3 years on: The UK's tech and innovation sector is yet to see the promised 'sunlit uplands'

Has Brexit impacted the UK's economic potential?
Has Brexit impacted the UK's economic potential? Copyright Kin Cheung/AP
Copyright Kin Cheung/AP
By Luke Hurst
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Three years since the UK officially left the European Union, the promised benefits, particularly in the tech world, have yet to materialise.


The United Kingdom left the European Union three years ago on January 31, to promises of incoming Brexit "sunlit uplands". It would be a country where innovation, competition, and growth would all thrive thanks to reduced bureaucracy and reduced costs.

That was what the UK government declared at the time, but three years on, the sunlit uplands have yet to emerge.

In terms of the wider economic outlook, Britain is the only G7 country to have received a cut in the newly published growth forecasts for 2023 from the International Monetary Fund (IMF), which predicts the UK’s economy will shrink by 0.6 per cent in 2023.

Even Russia, facing a slew of international sanctions over its invasion of Ukraine, has had its forecast improved, with the country projected to grow 0.3 per cent this year.

This economic stagnation, along with other consequences of Brexit, has impacted the country’s standing in the realms of science, technology and innovation.

Horizon Europe: UK out in the cold

Brexit has had a particular impact on science within academia. Due to the ongoing standoff over the Northern Ireland Protocol, the EU is blocking the UK’s participation in its ambitious research and innovation programme, Horizon Europe.

Horizon Europe is intended to boost the EU’s scientific and technological capabilities, innovation, competitiveness, and jobs.

A lot of scientists have just had to make other plans which are no doubt going to be less efficient and effective than what they would have been had the UK remained with associate membership.
Zach Meyers
Senior research fellow, Centre for European Reform

Scientists can apply for funding from the programme’s €95.5 billion budget, which runs from 2021-2027, and in previous years it has been an important source of funding for UK scientists.

In the 2014-2020 Horizon programme, the UK received the second-highest amount of funding (€7.9 billion), pipped to the post only by Germany.

"On the academic side, I would say that's been unequivocally bad, which any scientist or academic will tell you, and that's largely because of this dispute around Horizon and the fact that the UK still hasn't managed to get its membership," Zach Meyers, a senior research fellow at the Centre for European Reform (CER), said.

He tells Euronews Next that while there is speculation that the current UK prime minister Rishi Sunak may try to get the Northern Ireland Protocol issue resolved, which would pave the way for the UK’s association with schemes like Horizon Europe, Brexit has already done significant damage.

"Because of all these years in between of complete uncertainty about whether and when the UK would be part of Horizon, a lot of scientists have just had to make other plans which are no doubt going to be less efficient and effective than what they would have been had the UK remained with associate membership," he said.

When it comes to innovation, Meyers says Britain had a problem before Brexit - but it has exacerbated the issue.

"You now have a much smaller addressable market as the UK diverges with regulations from the EU," he said.

"And if you're a global business and you're looking at where are you going to invest in innovation and rolling out new products, clearly you want that to be in a market that has as many addressable customers as possible".

Worker shortages

Another effect of Brexit is the barriers put in place by ending free movement from the EU. Now, it is expensive for many companies to hire foreign workers, having to pay fees to be licensed to sponsor foreign workers.

Furthermore, these workers are burdened with extra costs, with the application fee for a typical "skilled worker" visa costing between £625 (€709) and £1,423 (€1,614), as well as the need to pay a "healthcare surcharge" of £624 a year.

"Even if you lower the regulatory criteria to qualify for a visa, if you have to pay thousands of pounds just to get into the country, you can see that the UK is going to become a less attractive location for migration than it would have been in the past," noted Meyers.


And the UK has many jobs it needs filling - especially in high-tech industries.

A committee from the UK Parliament’s upper chamber, the House of Lords, examined the issues around the labour shortage at the end of 2022, finding that ending freedom of movement has had “an impact on vacancies, which recently hit record high levels”.

While early retirement was put forward as the biggest reason for the labour shortage, EU workers leaving the UK and a drive to replace them with non-EU workers “has contributed to a mismatch within the labour force, accentuating vacancies and labour shortages in certain sectors,” the committee concluded.

Some jobs are listed by the UK government as a "shortage occupation," and have reduced requirements and fees in order to try to get the roles filled. These include many tech and science jobs, including roles for scientists, engineers, software developers, designers and IT professionals.

UK's potential

The UK’s role as a place for businesses to drive innovation has “probably been diminished” by Brexit, Meyers says, given the much smaller market access it now as compared to when it was part of the EU.


"That has got to be one of the largest contributors to whether or not innovation and investment happens in the UK versus somewhere else," he said.

An e-book released on Tuesday by think tanks the Centre for Economic Policy Research (CEPR) and UK in a Changing Europe examines the economics of Brexit and its impact so far.

Their research clearly shows the UK was more open to trade and immigration pre-Brexit - and more attractive for foreign direct investment.

In a recent report authored by Meyers and a colleague, CER also set out a number of steps the UK could take to improve the landscape for science and technology in the UK post-Brexit.

Rejoining the single market "would resolve many of these problems," the report says, but as this is unlikely for some years, at least settling the Northern Ireland Protocol should become a pressing priority.


Doing so would allow the UK back into schemes like Horizon Europe, as well as calm business nerves.

They also recommend setting out an evidence-based plan for assessing when the Uk should diverge from EU standards, and get the country’s political parties to agree to a pact on science and innovation funding.

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