Closer Ties to US Could Help UK’s Post-Brexit Economy

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Writing for TechCrunch, Matt Hancock suggests the UK’s “special relationship” with the US could fuel Britain’s economic future and ensure the pair maintain their status as global leaders in innovation. 

Matt Hancock is advocating for closer Anglo-American ties after Britain leaves the European Union, highlighting that it could bring big win falls for the UK’s technology industry.

Writing for TechCrunch, the Secretary of State for Digital, Culture, Media and Sport said: “We want to work with our global partners – to share expertise, and encourage investment – as we harness technology for the wider good. And that of course includes our old friend and closest ally, the USA.”

Britain and the United States have historically maintained close ties. Military and economic cooperation has been the hallmark of the “special relationship” for decades, and as the UK prepares to leave the European Union many in government and business look westward and ponder what will become of Anglo-American economic relations. US President, Donald Trump, was an outspoken proponent of Brexit and has touted a flourishing economic relationship and potential trade deal.

Leading Innovation

Hancock envisions that in a post-Brexit Britain, the US could become the UK’s top trade partner. He asserts that cooperation between the two nations will fuel a new wave of innovation by businesses and entrepreneurs from both sides of the Atlantic.

He said: “We live in an era of profound change, and are living with technologies set to change things ever faster. If Britain and America work together to develop these technologies for the good of mankind, in a way that is open and free, yet also safe and good for our citizens, we can maintain the global lead our nations have enjoyed in the fields of innovation.”

Finding New Friends

As Brexit negotiations have meandered along over the past few months, the prospect of Britain not achieving its desired outcome is becoming an increasing reality. In addition to difficult negotiations, there have been niggling signs that the EU has been playing hard ball – and it is adversely affecting British businesses.

In April, it was revealed that the European Investment Fund was shutting down funding to UK-based firms, and has been consistently depriving Britain’s vibrant start-up sector of funding since 2016. The EIF invested just £52 million in UK businesses last year, down a staggering 91% from 2016.

As well as a lack of investment in British start-ups, the UK has been nudged out of critical joint-projects such as the Galileo System. Galileo is the European equivalent of the US Global Satellite Navigation System and is due to be completed by 2020.

At a cost of ten billion euros it is a monumental project, and so far Britain has spent an estimated £1.2 bn contributing to it. The UK’s expulsion from the Galileo project would mean that companies such as Airbus, which is closely involved in the project, would need to move jobs from the UK to the EU. Naturally, this has been met with derision from business leaders on this side of the English Channel.

With actions like this, is Britain correct in assuming that American business relations are the future? Turning one’s back on long-time partners and rushing into the arms of American industry may appear cold-hearted, however Britain must do what it can to ensure its economic survival as the nation moves forward on its own.

If Europe isn’t playing ball then surely America will? Well, it may not be that simple.

Fresh Challenges

When Trump was elected, he vowed to put America first. This applies specifically to trade and according to him the United States hasn’t been getting the best deal from its global trade partners.

The President has been almost perpetually at odds with China over economic issues and it appears he will do anything to ensure that American interests are met when discussing any future deals. Although the idea of an Anglo-American trade deal has been suggested by Trump, recent visits to the Washington suggest that Britain may not get the deal it seeks from the US.

In March this year, US policy experts warned that Britain would have to “concede everything” in a potential trade deal with Trump’s America. MP’s visiting Washington were told Britain is in a “weak” position and would likely be used a guinea pig for harsh US trade policies. That very same week, the Trump administration imposed tariffs on imported steel and aluminium. This measure negatively impacted the UK’s already struggling industries while benefiting America’s ‘real friends’ Canada and Mexico – so much for a special relationship.

Great Strides

The politics of trade and business aside, there have been positive indications of a closer Anglo-American partnership recently, primarily in the technology sector. Hancock is right to say that we “have seen some very significant strides forward in this business relationship” as some of America’s biggest businesses are being drawn to the UK, with Apple and Google being prime examples.

Apple is building a glamorous new headquarters in Battersea Power Station – a stones throw away from the new US embassy – and Google is building a new billion dollar headquarters in the King’s Cross area of London. These tech giants are not alone as Facebook, Amazon, Microsoft and IBM all look to extend their operations here in the UK.

As companies such as these flock to the UK, so too do smaller US firms. All of these moves benefit the UK economy and, ultimately, could create a closer working relationship between British and American tech companies. With such vibrant digital and tech sectors here in the UK, it makes sense for British business to cosy in to multi-billion dollar companies such as Apple.

Global Leadership

At the 2018 Google I/O Conference, CEO Sundar Pichai set the agenda for the company’s future; with artificial intelligence taking centre place. A multitude of apps are set to be optimised by the introduction of AI and the tech giant intends to lead the global AI industry.

Leading the growth of artificial intelligence is also on the agenda for the UK Government, and Hancock was keen to point this out, stating: “UK government and industry together committed over $1 bn to support our AI sector, much of which will go towards entrepreneurs.”

“Funding has been set aside to create a nationwide network of tech incubators, that we’re calling “Tech Nation,” which will support new AI businesses as they get off the ground.”

In December 2017 a major study by Oxford Insights ranked the UK as the most ready nation for artificial intelligence technology, stating that the nation has “world-leading centres for AI research” and a “strong technology industry”.

According to the study, the UK is far ahead in the development of artificial intelligence compared to European competitors such as France or the Netherlands, and even the United States lags behind. Hancock is right to acknowledge this is a prime growth area, but as the Oxford Insights report states, the  “government will need to continue to invest in order to remain competitive in future years.”

With Google’s new UK headquarters in London and a concerted effort in AI development, the future of the British technology industry could be very bright.

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