The British tech industry has issued a stark warning to leading Brexiteer ministers that diverging from EU data protection standards after Brexit will “undermine” the UK’s status as Europe’s leading tech hub.
In an open letter to Liam Fox, the International Trade Secretary, Julian David, the chief executive of the industry’s leading lobby group, said that remaining closely aligned with the EU would not stop the UK seeking trade deals after Brexit.
“Diverging from EU data protection rules in domestic law post-Brexit would undermine this opportunity,” wrote Mr David, of TechUK, which represents nearly 1,000 UK tech firms, including several FTSE 100 companies.
The letter warned of a growing “misunderstanding” among Brexiteers that Britain could chase a Brexit dividend by diverging from the EU’s tough data protection rules in order to seek comparative advantage with Europe in a fast-growing sector.
“We would caution against the misunderstanding that adherence to the EU data protection regime is incompatible with securing high-quality trade agreements,” added Mr David in the letter co-signed by Dean Garfield, the chief executive of the ITI, TechUK’s international affiliate.
The plea from the tech sector’s chief lobby group to remain converged with the EU echoes those already made by the pharmaceutical and chemical industries. Thanks to a strong regulatory environment, a central timezone and its geographical location between the US and continental Europe, the UK handles 11.5pc of worldwide data flows – nearly four times its share of global GDP (3.2pc).
The UK is also Europe’s leader in digital start-ups, with 43pc of all large EU digital companies being started in the UK. It also boasts a burgeoning £7bn “fintech” industry, which employs 60,000 people as part of a financial services industry worth a total of £124bn a year.
TechUK’s decision to publish an open letter represents a shot across the bows to Mr Fox and other Brexiteer ministers who have been lobbying across Whitehall for a more divergent approach to Brexit – often citing the tech industry as an area with exciting possibilities for divergence. TechUK praised the work of the Department for Digital, Culture, Media and Sport, which is implementing the EU’s new general data protection regulation (GDPR), which will be fully taken into UK law ahead of Brexit.
TechUK said its members had made very clear that they had no wish to diverge from the GDPR post-Brexit, having already invested significantly in order to achieve compliance with the new EU regulations.
More importantly, Mr David told The Daily Telegraph, remaining compliant will be essential to both retaining and expanding the UK’s position as a global tech and data hub.
“This is the base of international trade deals, if we end up different, then that’s a problem,” he said, citing the work that the US had done to reach its own “Privacy Shield” agreement with the EU in order to keep transatlantic data flows moving. His message contradicts that of leading Brexiteer ministers who have argued internally that the UK needs to be able to have divergent regulations in future economic growth areas such as artificial intelligence.