What will Brexit mean for innovation in the UK?

In the fields of engineering, financial services, pharmaceuticals and the aerospace industry, the UK has an excellent track record in innovations and cutting-edge expertise. However, Brexit is obviously a game changer, and raises fundamental questions about the impact it may have on the future of British innovation. With an agreement far from being completed, the positive and negative predictions below are educated guesses.

Positive impacts could include the following:

  • The “£350 million a week benefit” – there is a potential opportunity for freeing up more money to invest in British innovation, or for Britain to partner with non-EU countries on R&D projects.
  • Britain needs to innovate and must do so in order to thrive in an international market where it will be selling to countries with an increasingly sophisticated and demanding customer base. With its proven track record in innovation, Post-Brexit Britain could be well-positioned to draw on expertise from around the world. Its economic and historical power may carry weight when negotiating agreements with individual EU countries and beyond.
  • There are opportunities for negotiating more favourable trading arrangements (and other bilateral agreements) with large markets like the USA, India, and China.

Conversely, there are several potential pitfalls associated with the post-Brexit business ecosystem:

  • The UK could face mass emigration of international know-how (like the ‘Brain Drain’ of the 1970s) as long-established partnerships with EU partners are broken or fundamentally reassessed and strict immigration laws make it more difficult for EU nationals to stay in the UK.
  • According to forecasts, an economic downturn is likely, at least in the short term. This means cutting costs, and the prime candidates are R&D, innovation, and investment in training and development. Access to funds such as those provided by the Horizon 2020 programme will be more limited. If the UK no longer contributes to overall budgets, it is less likely to receive significant grants once it withdraws.
  • The Catapult Centres play an important role in the UK’s innovation environment, but compared with other countries such as Germany or Japan, their scale and geographical coverage is limited. Independent evaluations have found that Catapult Centres will not be able to fulfil requirements in terms of supporting SME industrial innovation on the scale likely to be required.
  • Performance in innovation is measured not only by its ability to generate new knowledge but also by how well organisations can use it to upgrade, diversify and gain competitive advantage. Policies to nurture SME innovation are absolutely vital for future success.

But, finally, there are several political questions which will have a bearing on the future of innovation after Brexit. For example:

  • Hard or soft Brexit? A rigid separation, or a more fluid transition to newly defined, but amicable, positions?
  • How will innovation compete with different sectors competing for national resources (some of which have very powerful lobby groups)?
  • How will immigration measures affect EU nationals working long-term on R&D in the UK?
  • What efforts are taking place to forge partnerships with potential R&D partners outside the EU?

Answers to questions like these will ultimately determine what the future holds.

Can Kene Partners help your business with Innovation Incentives?

Arrange a free consultation with our team of experienced and approachable tax incentive advisors today. At Kene Partners, our mission is to help innovative companies access millions of pounds of government money set aside to foster innovation. Your business could be next.