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What would Brexit mean for IT businesses?

Tamlin Magee | June 24, 2016
As the weeks roll towards the day of the EU referendum, we take a look at what a 'Brexit' could mean for business

"If we get a 'no' vote I'm sure we'll see contractual terms changing," says law firm Kemp Little's head of commercial technology, Calum Murray. 

"Contracts being shorter - particularly for services - as people hedge to see where we land. They will ask: 'Should we protect ourselves by doing shorter deals?'"

And Murray warns that in procurement, decisions are already being delayed - because businesses are unsure if a leave vote will affect deals that are already on the table.

"From the customer's side, you will see, and we're starting to see acquisitions being delayed," Murray says.

On the supply side, businesses either procuring or offering IT services are likely to have to wrestle with a change in terms and conditions, too, says Osborne Clarke's Mark Taylor.

"As a result, English law-specific terms are more likely to be required than at present," he says. "This may also impact the choice of English law by US-based businesses as their preferred local law when contracting in the EU."

Taylor says leaving the EU would also undermine the perceived benefits of the European Commission's Digital Single Market project, which seeks to unify EU countries under one set of market regulations in digital.

"While no direct legislation has yet been implemented under this initiative, it is unlikely that harmonisation would occur to the same extent, although that would be determined by the format Brexit takes," Taylor says. "This makes the UK's position around the various initiatives uncertain."

Brexit for business: Prospects

For IT businesses, Brexit represents the unknown. With the government tight-lipped about any provisions for leaving, it's all speculation, and speculation is tough to prepare for.

Some of the worst case scenarios: leaving the EU could mean a shortage of talent and a drain of skilled workers. 

It could mean the redrawing of contracts, delays to procurement, and complications to trade. 

But these worries could be temporary or they could propel forward a tougher period of uncertainty.

At the same time, a prepared, slow and transparent exit from the EU does not necessarily have to be a disaster.

What's clear is that a step toward the unknown will naturally shake a conservative outlook into some businesses as they work to assess the lay of the land. The IT industry is no exception.

There are a few likely outcomes if the public casts a vote to leave.

Kemp Little's Calum Murray says Britain's got four main options.

He says Britain could embark on a route similar to Turkey, like a customs union agreement. Or it could go after the Switzerland model - with free trade agreements, or even free trade agreements by sector.

The UK could also join EFTA and the EEA to access the common market, similar to Norway. Or Britain could "forget we were ever part of the EU and treat it like any other third party we're going to trade with."


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