Downing Street may well refer to this month as Sweet November after one tech giant after another committed its future to the UK.
First Google told the world it’ll build a brand new headquarters in King’s Cross. Then Facebook announced it’ll double its UK operations by 2017. And on top of that IBM’s multi-million pound investment provided the icing on the cake.
This after Apple had already made public that it’ll create a campus in Battersea, which will make it the area’s biggest employer.
The times they are a-boomin’ for London’s tech industry.
What’s interesting about these big tech companies spending big in Britain is that Brexit doesn’t appear to have been a factor in their decisions. Though the announcements came after the vote, they had been looking to expand in London for a while.
Apple finalised its deal to move into Battersea Power Station in September after negotiating for a year. Google confirmed it’ll build a brand new office between the King’s Cross and St Pancras train stations after three years of planning.
Google’s chief executive Sundar Pichai did express concern about Britain toughening up its immigration policy, but it evidently wasn’t a deal-breaker.
Instead, the long-term trend of Britain attracting tech companies seems to have won out over possible doubts related to Brexit.
Britain has gradually developed into a tech hub over the past years. Between 2010 and 2015, the number of UK tech firms grew by 31 per cent.
Predictably London plays an important part in Britain’s tech boom. The city has a number of pull factors that make it an attractive destination for both business and bright minds.
Its leading industrial centre combined with the presence of top universities make London a sweet spot where business and talent can easily find each other.
This has had a snowball effect as the tech industry in London and the South East is growing faster than in California.
Silicon Valley is Silicon Valley for a reason. Once a tech hub starts to develop more and more firms get an incentive to relocate to this place as well.
With the money and the brains now concentrated in London, the city’s built a reputation for itself. Young ambitious people from all over Europe are flocking to the British capital thinking it’s the best place to get noticed.
It’s not hard to see why. The big players have invested heavily in UK technology companies in recent years.
Google paid £400m for artificial intelligence (AI) start-up DeepMind, Microsoft acquired keyboard app company SwiftKey for £177m, while Twitter wrote off £102m to get hold of Magic Pony Technology, which specialises in machine learning.
Interestingly, these British businesses are all working in AI. As big multinationals’ interest in this field grows, London is emerging as its global centre. It’s a lucrative development considering AI is expected to become a $70bn industry by 2020.
Another subsector of the technology world that is particularly advanced in London is the financial technology (fintech) industry. As this sector focuses on improving financial services, it may be clear that London has a comparative advantage due to the presence of the City.
Of all the tech businesses, the fintech industry may be the most vulnerable to Brexit though. In case Britain’s financial centre loses its passporting rights, the City could thin a bit which is unlikely to benefit fintech.
Still, on the whole the outlook for Britain’s tech sector looks rather rosy indeed.
It’s hard to see investments from companies like Apple, IBM and Facebook in the UK independent from the rise and rise of the British tech industry that we’ve seen over the past years.
With 45,000 new tech businesses sprouting in the period 2010-2015 – one for every hour – it’s created an environment that is able to lure the biggest companies on the planet to London.
The UK government will be following this trend with delight.
Though the huge investments from technology companies into the country don’t appear to be linked to the EU vote, the government will be relieved to see that Britain still acts as an attractive destination for foreign investment post-Brexit.