The British government says it wants to serve as a bridge between the US and Europe. Cue much eye-rolling at that tired, and meaningless, cliche.
The trouble with bridges is they do not generate much money and people trample over them in both directions. It would be far better for Britain to aspire to become a destination in its own right, not just a connection but a node.
That is especially true when it comes to tech. The country’s potential was highlighted in a letter from the UK’s Council for Science and Technology to the Chancellor of the Exchequer in October. Over the past 20 years, Britain has emerged as one of the top three places in the world to invest in innovation. It benefits from a strong R&D base in its universities, world-class scientific and engineering talent and an increasingly mature VC industry.
More than 750 VC-backed companies have scaled to more than $25m in revenue, injecting dynamism into the economy. The advisory council, led by the government’s chief scientific adviser Dame Angela McLean and BP’s former boss Lord Browne, made 5 recommendations:
- Mobilise more of the country’s £4.6tn of pension fund assets for growth capital.
- Improve the connections between private and public markets.
- Develop specialist skills among the British population and attract world-class talent.
- Improve public sector expertise to support innovation.
- Build awareness of the UK as an attractive investment destination.
This is all good and sensible stuff, which the government is fitfully pursuing. In January it pushed ahead with the AI Opportunities Action plan, pulled together by Entrepreneur First’s Matt Clifford, setting up AI growth zones and encouraging datacentre construction. Ministers are also in “very active discussions” to restructure the pension fund sector and encourage them to invest more in private markets.
But a private conversation I had with a Labour politician last week made clear to me why government support for the tech sector is never going to be a top priority. Ministers believe it may worsen, rather than alleviate, inequalities in wealth distribution.
The tech sector tends to be clustered in the more prosperous cities of Britain — most notably London. Its success does not directly support the government’s mission to improve living standards in poorer regions (even if it produces many indirect benefits by lifting the economic growth rate and generating more tax revenue). That government mindset also helps explain the tax rises and reductions of business asset disposal relief that have so irritated the tech sector.
The choice, this politician suggested, was whether Britain aspires to become more American or more European when it comes to tech. That dilemma has become all the more acute because of the “craziness” of the Trump administration. It is hard to square the ambition to emulate the US in tech with European sensibilities on welfare spending. Should the UK look east or west? Across the Atlantic or the Channel?
The brutal truth is, as the politician acknowledged, Britain cannot turn its back on the US. It is massively dependent on US tech firms and VCs for technology and capital. That partly explains why the government has been so conspicuously cosying up to the US administration. For example, it followed the US lead and refused to sign the final declaration at the Paris AI Action summit. And it has renamed the UK’s AI Safety Institute the AI Security Institute (safety is an unacceptably woke word in certain Washington circles).
Post-Brexit, Britain’s links with Europe have also weakened. But European founders say the UK remains a good place to start a business, even if less attractive than it once was. Britain is still a big talent magnet for many tech entrepreneurs and London remains Europe’s VC capital.
That suggests that Britain should look neither east or west but within. Simplify regulations for the country’s startups, incentivise entrepreneurship, mobilise more growth capital and do everything possible to make Britain an attractive place for international founders to start — and scale — a business. There are likely to be plenty of foreign and American tech “refugees” from Trump’s regime looking for a new home.
A growing economy will generate more wealth for everyone.
Read the orginal article: https://sifted.eu/articles/john-thornhill-opinion-us-eu-rules/
