What Does Brexit Mean for the Internet of Things?

Britain's exit from the European Union is creating massive uncertainty for the U.K. economy. Technology firms, including IoT players, face potential challenges to their markets, funding and workforces, but they can also take advantage of fresh opportunities.
By Nick Monnickendam

Meeting the Challenge
In spite of the United Kingdom's many strengths, Brexit will undoubtedly create significant challenges.

If U.K. firms were to lose access to highly skilled E.U. nationals, then this would make a serious dent in the available talent pool. In other words, it's possible that if the United Kingdom pushes to significantly reduce the level of immigration from the European Union, this would make it difficult to recruit large numbers of E.U. employees. To get a sense of the potential scale of the impact, a survey conducted by DueDil found that one in five startup directors in the United Kingdom are immigrants, while the total number of E.U. nationals across Britain has reached around 2.1 million out of a total population of approximately 65 million. A pragmatic approach to ensure that the U.K. still has access to this flow of talent will be an important part of the country's continued success regarding the IoT.

The type of trade deal reached between the United Kingdom and the European Union, and the specific arrangements for digital related sectors, will clearly have a major impact on IoT businesses. It is simply too early to tell what the end result will look like, so this is one area in which firms need to consider and be prepared for a range of eventualities. Again, though, if pragmatism prevails, then it is entirely possible that a favorable deal with low or zero tariffs can be agreed upon.

When it comes to investment, the initial signs are mixed. The planned acquisition of ARM, as well the announcement that GlaxoSmithKline plans to invest heavily in expanding its U.K. manufacturing operations, suggest that major players are still willing to place large bets on the strengths of the U.K. economy and workforce. At the same time, there have been a few anecdotal indications that financing deals are harder to close. If this is occurring, then the hope must be that this is a temporary pause while investors start to digest what Brexit might mean for the British economy. U.K. firms and academic institutions also stand to lose out on some future financial support from the European Union, such as the Horizon 2020 research and innovation fund, and this will need to be replaced with alternative public- or private-sector finance. It will also be important to ensure that it remains attractive for global corporates to keep their headquarters in Britain

Fresh Opportunities
Brexit will create new opportunities for U.K.-based firms. For example, the devaluation of the pound that has occurred since the referendum passed makes our exported goods and services more attractive. This is particularly exciting for software providers and other businesses that have a low import dependency, and which export outside of the E.U.

Fresh impetus could also be given to trade and investment deals with non-E.U. countries. This could help to open up large IoT and smart-city opportunities in places like India, China, North America and Australia.

Planning for Uncertainty
None of us has a perfect view of what the future will bring as Brexit unfolds. Forward-thinking IoT businesses and their customers will want to systematically harness and analyze the data that helps them assess how different scenarios could impact their risks and performance. If they can turn this insight into action, then they will be even better placed to withstand the impacts and reap the benefits from Brexit.

Nick Monnickendam is the marketing director at IoT platform provider Flexeye, which has developed Hypercat, a specification designed to support interoperability between Internet of Things services and applications. Previously, he ran marketing operations for smart-metering and machine-to-machine products at British telecommunications firm Arqiva.

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