Brexit – bad news for Britain and the UK data centre industry?

I suspect everyone in the UK woke up this morning and absorbed the news with nothing more than stunned silence – either not believing that their desire to leave the EU had been granted or failing to understand that over 50 per cent of the population could be ‘so ignorant’ as to want to leave the EU. Add to this the Prime Minister’s inevitable, dignified decision to hand over the reins of Government in the near future, and the equally inevitable crash of the London money markets, and I suspect everyone in the UK is wondering exactly what it is that we, as a nation, have or haven’t done to ourselves.

And the reality on this subject is that no one knows. True, there seems to be a worrying lack of direction from the victors interviewed by the media – no clear policy statements, not even an agreed time on when to trigger the two year exit negotiations – but this is a situation that has never before been experienced, and one suspects that, when Winston Churchill announced that Britain was at war with Germany in 1939, nobody knew if a) he’d made the right decision or b) what would follow, so let’s not be too harsh on the Brexiteers for their lack of plans. Perhaps most worrying for the UK, is that, in the interests of the very democracy that allowed the In/Out vote in the first place, Scotland will have to be given another chance to decide whether it wishes to remain a part of the UK (this time as part of a UK outside the EU and not in it as previously voted upon), and it doesn’t require too much imagination to contemplate a scenario where the UK, and Great Britain, further disintegrates as Northern Ireland and maybe even Wales are given the choice as to whether they want to be a part of the EU or not.

The business pros and cons of the In/Out debate have been well aired, and manipulated, by both sides – and the City has given its early indication that it is fearful of the Out verdict. Where the banks lead, others tend to follow, if only because the banks tend to underpin much else that happens in the business world. Add to this the very real possibility that countries outside of the EU who have regarded the UK as the perfect base within the EU, will have to reconsider their position, and it’s not too difficult to imagine the scenario where a (self-inflicted) recession grips the UK.

The Digital Age knows no geographical boundaries – both a blessing and a curse, and the UK will have to hope that the benefits of this lack of boundaries will outweigh the negatives. Foreign investment in data centres in the UK will almost inevitably shrink in the short term (linked as it is to the money markets). Longer term, the impact may not be so dramatic or harmful – after all data centres are cropping up all over the world, and, for the vast majority of data centre users, the location of their data is not a major issue – despite all the smoke and mirrors to the contrary. However, for those companies who have to be near to their data centres, and who also have to be based in the EU, the choice to leave London will be an easy one.

What impact the leave decision will have on cybersecurity and other less tangible IT issues, is rather less easy to predict. The EU would appear to be in the driving seat when it comes to the exit negotiations, so this organisation will have to decide how much, or how little, it values the input of the UK, or maybe just England, when dealing with cross-border issues.

Unfortunately, there are very few hard facts to which anyone can point when it comes to the likely consequences to the European data centre industry of the UK’s decision to leave the EU. The pessimists will suggest that the UK’s international data centre industry will be decimated; the optimists will suggest that nothing will change, or that the data centre will thrive, free from the EU red tape that is currently ‘holding it back’. The reality almost certainly lies somewhere in between.

 

If we can say one thing for certain, it is that the European data centre industry minus the UK will not be quaking in its boots that the Leave decision has handed the UK data centre industry a massive advantage in the international data centre market. After all, it’s difficult to imagine a scenario where the trading ‘club’ that the UK has decided to leave will give it beneficial terms over and above its members when it comes to any trade agreements. And students of history might also suggest that, not only will there be no ‘special favours’, but there could well be a few extra hurdles to negotiate as well.

Leaving the data centre industry aside for a minute, perhaps the most startling (and depressing?) aspect of the whole referendum is the fact that it was the older part of the UK population that had the largest majority of leave voters, while the younger voters had a significant majority who wished to remain in the EU…