Since Brexit became a reality Britain has entered a period of unprecedented uncertainty. Each day brings renewed claims that our nation will either be losing out or mining a rich seam of opportunity once we withdraw from the EU.
In the days following the referendum it became clear that we had no plan in place to guide us through the economic and political confusion that has become commonplace in the UK. The £350 million a week we were due to save is now understood to be a hypothetical and exaggerated figure. We do not know whether EU nationals currently living in Britain will be permitted to stay here. With the appearance of the #techxit hashtag, which questioned the exit of the tech sector from the UK, our ability to innovate and therefore prosper was thrown into doubt, followed by further questions around whether Britain will suffer a 'brain drain' in a gusty loss of talent.
This week Sir Prof Venki Ramakrishnan, President of The Royal Society, spoke out about the uncertainty of scientific research in post-Brexit Britain. He voiced pervasive concerns that UK researchers are already being overlooked by EU collaborators due to financial uncertainty, and that EU researchers based in the UK need assurances from Government that they will be able to remain here indefinitely. In a joint statement, a number of Academies, including the Academy of Medical Sciences, the British Academy, the Royal Academy of Engineering and the Royal Society, claimed that uncertainty following the vote is already having an impact on research and innovation. This throws into question whether world class research will continue to "endure" as Science Minister Jo Johnson has suggested.
So what are the real implications for the Research and Development sector, an area which has received roughly £1bn in EU funds per annum over the last ten years? How well positioned will we be to bolster our renowned reputation as a leading global R&D contender in post-Brexit Britain?
In the lead up to the referendum concerns were raised across the tech, research and education sectors, bolstered by reports from The Royal Society and Digital Science citing the importance of EU financial support, as well as the collaborative benefits of membership. On the other side of the debate, however, Brexit garnered support from innovation and manufacturing heavyweights like Dyson and JCB.
Lord Bamford, chairman of JCB, asserted that, as one of the largest global economies, the UK has little to fear going forward. Both he and Sir James Dyson have referred to an increased flexibility afforded by the removal of EU legislation resulting in the reduction of costs of bureaucracy itself, enabling UK businesses to trade more freely with non-EU countries. Dyson also voiced frustration with free movement within the EU for complicating procedures surrounding the employment of non-EU researchers and engineers, claiming this jeopardises the UK's innovation landscape. It is unclear whether these views are based on an objective view of the debate or on personal opinion. However, they come as a sharp contrast to the widespread fears that increased border control may harm the attraction of top EU talent to our research-focussed companies and universities.
Professor Angus Dalgleish, Foundation Professor of Oncology at St Georges University of London argues that, instead of turning them away, Brexit will, in fact, allow Universities to be freely able to 'attract and recruit the finest minds from across the planet' and it is these students who will 'prove to be the entrepreneurs and employers of the future'. Graeme Reid, chair of science and research policy at University College London has written that 'leaving the EU does not mean an end of this quality, but it requires profound changes in the practicalities behind it.'
A key funding issue is the allocation of the £13bn per year that will no longer be invested in EU membership. A report published in May by research-focussed tech company Digital Science stressed the importance of using these funds to alleviate the shortfalls created by Brexit in areas such as R&D. In a country that has increased its dependency on EU support by contributing as little as 1.63% of its GDP to research, this will be a vital step to stabilising the innovation sector in the coming years.
Private sector investment has also been notably low in the UK, with British companies contributing as little as 1.06% of GDP to R&D (almost 80% lower than businesses in Germany). If we are able to form a strategy which incorporates and addresses these issues before our exit from the Union, then the future of R&D in the UK will benefit hugely.
Startups and innovation
Only two years ago, the UK was the number one destination in the EU for foreign investment from the likes of USA and India. The type of membership the UK Government negotiates with the EU going forward will therefore determine whether some foreign investors continue to seek those opportunities in the UK.
A report in The Hindu newspaper highlights the tone of optimism in the Indian circles. An SBI report, for instance, mentions, 'This referendum will have geopolitical implications and will affect the relation of the rest of the world with Europe. But, our take is that though such an exit brings up a lot of uncertainty within Europe, it definitely opens up opportunities for India'.
Could Brexit mean a new and exciting future for innovation and investment from non-EU emerging markets? The consensus is that positive action is the best way to navigate the current slough of economic uncertainty. Since the referendum it has been reported that nine key SME trade bodies, including the Federation of Small Businesses and Enterprise Nation are set to join forces in order to maximise their ability to support small and medium sized businesses. The overriding message of the collective is that optimism is crucial, with a strong focus on seeking fresh new global trade arrangements and cutting down on unnecessary regulation.
Of course, securing EU funding is not off the table for countries without full membership. We need look no further than Norway to see that negotiating for associate member status would leave us open to financial support as well as collaborative opportunities in ground-breaking future projects. In the last ten years Norway has received just under £900m in research funding. Although this is a small percentage of the funds allocated to the UK in the same timeframe, we must remind ourselves that Norway has a current population of 5.3 million; a mere fraction of our own headcount of 65.1 million.
The caveat, however, is that Norway's EU deal involves compliance with various regulations which leave the country with no say in the future development of European R&D. Additionally, some of these regulations, such as contributing to the budget and free movement of labour, formed the backbone of the Leave campaign and are unlikely to resonate with disaffected Leave voters. Striking a balance between accessing financial and collaborative benefits and establishing independent UK policy on free movement and trade will be a huge consideration in ongoing negotiations.
Horizon 2020, the far-reaching and ambitious EU research and innovation funding programme which launched in 2014, is open to associated countries as well as member states. Despite science minister Jo Johnson's promises to scrutinise evidence of political discrimination in the research sector there is little to be done to reassure companies and academics, both here and abroad, about the reliability of European funding models either now or in the years to come.
As the UK and EU await each of our fates and those in power deliberate over how the UK will renegotiate its position, it is clear that public, private and voluntary sectors will need to co-operate to strengthen the UK's R&D position and mitigate any potential damage to its reputation and the R&D sector in general by seeking any path by which pan-European research continues. However the UK decides to proceed, sectors such as technology and science need access to global markets and will increasingly need to work without borders given the rapid evolution in technology and innovation.
Ultimately, the future of R&D hangs in the balance awaiting news on the future of the UK's relationship with the EU. Given the current state of affairs, who knows where the political yellow brick road will lead us.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.