We've been freed from membership of a supra-national body whose culture treats innovation as threat rather than opportunity
Source - Daily Telegraph - 19/10/21
What was that about investment draining away from Britain to the EU after Brexit? That is not quite how things are working out. According to Dealroom, a website which provides data on finance for start-ups, British companies have raised over $30 billion in funding in 2021, more than twice that they raised last year. Our tech companies have raised more finance than any other country in Europe and behind only the US and China. Among the successes are Revolut, a banking app company which is now worth $33 billion and Hopin, which organises online events and is now worth $7.8 billion.
Measure investments in start-ups on a per capita basis and two of the top four countries in Europe are outside the EU. First comes Estonia on 1,967 euros per head investment in 2021, followed by Sweden on 1,769 euros, followed by Switzerland on 1,414 euros and the UK on 1,112 euros. France is on 470 euros and Germany on 440 euros.
True, Estonia’s success shows that EU membership is not incompatible with establishing a fiscal and regulatory environment that is friendly towards starting up tech companies, but it is worth asking what, exactly, has the EU done to stimulate investment in technology? The general story of the past four decades has been: America innovates, while the EU regulates. American tech giants have given us online shopping, social media, smartphones, free telephone calls around the world, videos on demand, the ability to find out information at any time, in seconds, and many other things that we now take for granted. Meanwhile, the EU has given us privacy laws limiting use of our data, online taxes and in the case of some revolutionary technologies – such as GM foods – an effective ban.
This is not to say, of course, that tech giants do not need regulating. They do, and in some respects US authorities – and European ones, too -- might have been a bit slow in seeing how, say, social media platforms can be used to the disadvantage of society. But one does wonder what the modern world would look like if the US did not exist and the EU was the world’s dominant economic superpower. My guess is that we would be stuck around the early 1990s, with citizens limited to communicating with each other via Minitel – the now long-forgotten proto-internet owned and run by the French government. It is hard to imagine the EU tolerating the anarchic engine of invention that is the real internet had it not first established itself in the US.
It is remarkable that every single one of the tech giants which have changed the world and have, in the process, displaced gas and oil companies, along with banks, as the world’s largest corporations, are American or Chinese. Europe has not even nearly – so far – produced a FAANG or a Tencent.
Britain’s challenge now is to steer a middle way: one which encourages invention and enterprise, where regulators accept new ways of doing things – but which does not offer opportunities to conmen and fraudsters to operate beneath the radar. That is not always an easy balance to strike – just look at how online banking has given rise to an epidemic of fraud. But it will be a lot easier for a nimble UK to achieve, freed from membership of a supra-national body whose culture tends to treat innovation as threat rather than opportunity.
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