EY study finds UK well-placed for digital entrepreneurs post-Brexit

SUMMARY:

Post-Brexit trade was on the agenda at the G20 Summit last week, with uncertainties abounding. But an EY study finds the UK well-placed as a potential haven for digital entrepreneurs.

UK Prime Minster May and US President Obama
UK Prime Minster May and US President Obama at the G20

As the post-Brexit vote economic impact continues to be an evolving topic, an interesting study from accountancy firm EY has just picked out the UK as the country within the G20 group with the best regulatory and tax environment for setting up a digital business.

As the post-Brexit vote economic impact continues to be an evolving topic, an interesting study from accountancy firm EY has just picked out the UK as the country within the G20 group with the best regulatory and tax environment for setting up a digital business.

Once other factors are taken into account, the UK’s standing varies. For example, Great Britain is ranked second for digital knowledge base and ICT market and fourth for entrepreneurial culture, but seventh for digital skills and ninth in terms of access to finance.

The USA is still seen as the most entrepreneurial culture, possessing the most digital skills and entrepreneurial education, the greatest digital knowledge base, and largest ICT market, but comes second to Canada in terms of best access to finance and third behind the UK and Canada in terms of its business environment.

Source - The EY G20 Digital Entrepreneurship Barometer: overall results
Source – The EY G20 Digital Entrepreneurship Barometer: overall results

The G20 is made up of 19 individual countries—Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom and United States—plus the European Union (EU).

With questions still up in the air about inward investment post-Brexit, champions of the UK digital economy will take some pride from being in the top 5 nations in the G20 for digital entrepreneurship, alongside the US, Canada, Japan and Germany. France and the EU are in the following quartile, while Italy is in the third.

Source - EY G20 Digital Entrepreneurship Barometer: G20 countries by quartile (in alphabetical order by quartile)
Source – EY G20 Digital Entrepreneurship Barometer: G20 countries by quartile (in alphabetical order by quartile)

Radhika Chadwick, Partner for Digital Government at EY, argues that the UK  government can find good news in the report: 

It’s great to see the UK leading the way for supporting digital start-ups. Taking the hassle out of getting a business off the ground boosts the creation of innovative and dynamic businesses, which drive economic growth in the UK.

Access to finance and digital skills look to be a bigger challenge for young UK entrepreneurs compared to other G20 countries but despite this, we are still faring better than the majority.

‘Brecommendations’

But there are issues that need to be addressed, particularly against a Brexit backdrop. Bjorn Conway, head of UK government and public sector at EY, advises:

With Brexit on the horizon, the UK government, more so than the other G20, will be thinking about how the economy can be set up to succeed in this digital age. By understanding the issues that young entrepreneurs face, policy can help play a critical role in turning digital disruption into a powerful opportunity. Supporting an entrepreneurial environment that encourages our young people to establish, grow and scale their businesses will ensure the UK continues to be competitive on the world stage into the future.

With that in mind, EY offers a number of policy recommendations, applicable to all governments, of course, across five key areas.

Access to finance

  • Support the development of early-stage financing and support schemes for young entrepreneurs, including incubators and accelerators.
  • Reduce investment barriers to promote access to foreign capital for entrepreneurs.

Entrepreneurial culture

  • Introduce entrepreneurship as a specialized stream in higher education and schools.
  • Engage industry in the development and delivery of tech, digital and management-focused training.
  • Protect young entrepreneurs’ intellectual property with targeted provisions to encourage innovation and collaboration with larger organizations and investors.

Digital business environment

  • Champion a G20 entrepreneur visa and promote the development of support networks for newly arrived entrepreneurs in G20 host countries.
  • Establish clear guidelines on data privacy and security, including usage, data rights and quality.

Digital skills and entrepreneurial education

  • Teach entrepreneurship in schools from elementary through to final years of high school and prioritize STEM education, particularly for female students.
  • Promote youth entrepreneurship mentoring and coaching programs within industry and entrepreneurship networks.

Digital knowledge base and ICT market

  • Foster multi-stakeholder digital clusters and networks, including those with a sectoral or city-level focus, along with coaching and mentoring schemes.
  • Support university-entrepreneur collaboration, including through funding incentives for universities.

The EY report – Disrupting the disruptors: Disrupting youth entrepreneurship with digital and data -was released to mark the start of the G20 Young Entrepreneurs’ Alliance (G20 YEA) summit in China.

My take

With last week’s G20 summit in China sending out mixed signals to the British delegation about life after Brexit, the need for the UK to build its case for being open for business in a new world order has never been stronger.

Against that backdrop, the conclusions of the EY report can only be seen welcome, whatever side of the Brexit debate you sit on.

That said, there’s a depressing familiarity about the lack of access to finance finding. This has been a blight on the UK tech industry for as long as I can remember.

So many innovative UK firms have had to up sticks and move to the US, flying under a flag of convenience in order to win investor funding and get inside corporate America. I recall once having a stand-up argument with a US industry analyst who swore me down that a particular software firm had been founded in Dallas, not London.

There’s no-one to blame for that other than successive UK governments, of course. I recently spoke to one US CEO who described London as a fantastic recruitment agency for digital talent. A post-Brexit Britain needs to halt that brain drain once-and-for-all and make it easier for home-grown firms to thrive on their own soil, as well as encourage the rest of the world to come and do business here.

Image credit - EY/YouTube

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