2017 has already been a good year for tech in the UK. Snap, the US company behind the messaging app Snapchat, announced in January that it will be establishing its international non-US headquarters in London.
The company’s UK workforce is already 75 strong, and is expected to increase following this announcement. However, the decision to locate in the UK is significant, not in terms of job creation, but rather the confidence it signals in the UK tech sector.
Historically, there has been a tendency for giant US technology companies to locate their EU and international offices based on favourable tax regimes. Many, including Apple, Facebook, Google, and Twitter, have significant operations in the UK, however they route their revenues through Ireland and other low tax jurisdictions.
In the wake of Brexit, there was also a view that tech companies would flee the UK, choosing instead to locate within the EU where they would have guaranteed access to the single market.
Snap’s decision goes against this trend and is a boost for London’s global reputation as a hub for creative industries. This signals that post Brexit London, with its skilled workforce, strength in advertising and relatively low tax rates will remain a very attractive location for tech firms, especially those that aren’t moving physical goods across borders.
This decision also comes in the wake of recent investment commitments from Apple, Google, Facebook and IBM in the UK. Matt Hancock, Minister for Digital and Culture, has been quick to applaud these developments, hailing them (on Twitter no less!) as “another vote of confidence in our #tech-economy”.
The strength of UK tech is above all due to the importance of the UK market. Snapchat, for example, has 150 million users worldwide, with the majority based in the US. But of its 50 million users in Europe, an impressive 10 million (20%) are in the UK. Even Facebook and Google, which route their sales through Ireland, do not hide the fact that their biggest advertising revenues in Europe come from the UK.
This significant ‘plugged in’ market, dominated by tech savvy youngsters with spending power guarantees that the UK, and London in particular, will remain one of the most relevant hubs in Europe for international tech firms.
The tech sector is also supported by world leading universities creating the necessary skilled workforce, an international financial hub able to fund innovation, and a thriving conferences and exhibitions sector that hosts events such as London Tech Week. There, big established international tech companies and start-ups alike can exhibit their products and showcase their latest innovations.
Snap’s decision bodes well for the UK’s uncertain future in a post-Brexit world, and indicates just how much London and the UK will continue to be a vital global hub for tech.