Paris and Berlin are after London's crown as Europe's technology capital, here's how businesses can help hold them at bay.
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The current political landscape in the UK is shifting. Brexit, for example, has led to a climate of significant uncertainty. Whilst its affects, and even the associated specifics are yet to be determined, the lack of insight has led to an opportunity for challengers.
With this period of uncertainty, Paris and Berlin, the two areas with the largest concentration of technological potential, are emerging as increasingly lucrative areas to do business.
A recent survey of EU nationals in FTSE 250 companies noted that 56 per cent were either ‘highly likely’ or ‘quite likely’ to leave the UK before the conclusion of Brexit talks. Further, the survey noted that 42 per cent of skilled EU workers had already “taken action to change their immigration status”.
The consequence of this is simple: London’s status as the tech capital of Europe is under threat. The question, therefore, must be asked – how can London stay ahead of the challengers to its crown?
The French Tech Visa fast-track initiative that launched two years ago, for instance, has made it much easier for start-up founders, employees, and investors to live and work in Paris compared to London.
Despite the UK as a whole receiving more investment, £4.7bn last year, its rate of growth was steadier when compared to the huge growth we have seen in France. As the level of investment has spiked, so too has the demand for tech talent across the Channel.
In 2016 alone, France saw 590 rounds of capital raising. A strong indication of industry intent. Berlin is no different. Start-up investment in the German capital city jumped by €1bn in 2017.
Notably, 44 per cent of all German investments occurred in Berlin, with the tech success stories being Delivery Hero and Auto1 - securing €387m and €360m respectively.
London remains strong, but perhaps not quite as secure as before
With Merkel now having secured her fourth term as Chancellor, the similarities between the French and German markets are clear, with both countries offering favourable visa conditions for skilled tech specialists – vital to supporting further growth in these markets.
There has been a misconception that the French tech scene in particular lacks ambition and confidence, but nothing could be further from the truth.
The opening of Station F in Paris this summer, combined with the €10bn pledge to lure foreign investment, are major signals of intent for a tech scene eager to challenge London’s position.
Economic uncertainty - population liquidity
Brexit and the on-going uncertainty over what it will mean to the economy has roused debates over immigration to the UK, which is in stark contrast to what we see happening in France. Currently, one in three tech roles in London are held by international workers, according to Tech Nation's 2017 report.
Traditionally, London has been heralded as the destination of choice for young tech specialists – both from within the UK’s borders and from without. For the first time in 10 years, however, we see more people leaving London than entering it. Net migration away from London has now reached 80,000.
“Net migration away from London has now reached 80,000. Whilst a drop in the ocean in a city with a population of nearly 9m, the shift is clear. Talent is increasingly moving away”
Whilst a drop in the ocean in a city with a population of nearly 9m, the shift is clear. Talent is increasingly moving away. Attribution, however, is currently less clear. This shift is being pinned to a number of reasons – a lack of affordable housing, limited culture, and of course, Brexit.
"What is evident is the result - tech hubs in Paris and Berlin are booming in the face of huge investment, while London struggles to retain its population.
"With the level of investment entering the French and German markets, and an open arms approach to talent migration, it is only a matter of time until London is caught up and challenged for the number one spot."
Companies like BlaBlaCar, Criteo, Deezer and Dailymotion were all founded in France
Uneasy lies the head that wears a crown
The question then remains – with challengers on all sides, how can London retain its long-held position as Europe’s leading tech hub?
The most significant step must be to address the elephant in the room. While uncertainty over the UK’s role in the European Union is in question, tech talent and investment will naturally gravitate elsewhere.
Investors, above all, value strong returns on said investments – these returns come from positions of strength.
“The question then remains – with challengers on all sides, how can London retain its long-held position as Europe’s leading tech hub?”
Investment in the UK’s tech scene is ready and available – beating French and German markets by a significant margin. The issue, therefore, is one of perception. To paraphrase London Mayor Sadiq Kahn – London must be seen as “open for business”.
Until this happens, and until we are able to retain the talent necessary to monopolise on London’s significant potential, we must focus inwards. Short term, this constitutes upskilling existing staff. In the long term, a focus on increasing access the global talent pool is essential.
London has, for good reason, held competitors at bay. A combination of infrastructure, talent availability and strong transport hubs means investment in London is still strong. What London has, however, is an image problem – one that must be addressed if we are to succeed post-Brexit.
David Thuillier is managing director at Montreal Associates, an enterprise technology staffing company.