The UK has long had an ambivalent relationship with Europe, so it’s perhaps no surprise that the referendum on whether to stay or leave should still be on a knife edge with only days to go. As a British resident of Berlin, running an ecommerce platform, Spreadshirt, I get to view the argument from outside of the UK, and field questions from Germans who wonder why the UK has so little love for the EU.
Perhaps it’s obvious that I would be pro-Europe and encouraging people to vote to remain, but it some of the reasons may surprise business people. For example; the lack of red tape, the competitiveness of EU companies and whether the UK’s tech scene can survive investment moving elsewhere.
The myth of EU red tape
I started out in ecommerce in 1995, so I’m old enough to remember the pre-EU days; when exporting meant controls at every border and a dozen or so currencies to work with. In the UK, deliveries from the US would often be held up at customs while someone decided whether the appropriate duty had been paid. At Spreadshirt around half of our global business happens inside the EU. In 2015 we shipped 3.6 items (printed t-shirts, hoodies and other wearables) to 180 countries, so we already see the benefits of being inside the EU.
Yet we still sometimes see the old problem when we ship to Norway and find our t-shirts or other wearables are stopped for time-consuming consideration at the border. This is shipping as it used to be; slow, difficult and annoying for consumers. Today, inside the EU we have open borders from the Atlantic to the Baltic and the far end of the Mediterranean, along with a single currency which makes ecommerce easier for businesses and consumers.
The competitiveness of EU companies
The British have taken to ecommerce and are some of the best online shoppers in Europe. But that’s not to say that companies across the continent are not eyeing a possible Brexit with a gleam in their eye. I expect ecommerce companies in Berlin to be watching what happens in the UK this month. If the UK votes Leave, German ecommerce companies could take a look at their UK competitors who are exporting to Germany, and see Brexit as an opportunity to steal their customers.
The size of the EU market enables businesses to scale and encourages growth. There are 342m (internetworldstatistics.com) internet users on mainland Europe. Those companies that embrace this market can accelerate their growth. The UK may not want to take advantage of this market and opportunity, but it’ll find that its neighbours and competitors most certainly do.
Investment could move out of London
I think leaving the EU would be a disaster for ecommerce and internet brands who want to compete in a global market. Investment is key to growth, but investors don’t want business to be hard. They don’t want to wait years while the UK renegotiates trade deals, they want to do business now. Rather than invest in potentially isolated UK start-ups, investors may well look to other thriving tech centres like Berlin and Lisbon.
This huge, internet-savvy, culturally similar market is right on the UK’s doorstep and yet, although the British appreciate the trading opportunities, the size of the market doesn’t get enough recognition. It gives companies the opportunity to get to scale, quickly. This means they can begin to compete with other huge markets; the USA and China.
It’s this geographic location, English language and strong financial district in London, which encourages investors from all over the world to the UK’s tech hubs. And yet, I am already questioning whether London can maintain its place as a top internet city if the country votes to leave the EU. If it is outside of the local market, will language and finance be enough to maintain its position?
I’d also be sad to see the UK vote to leave just as the EU comes up with a potential useful initiative for ecommerce and a good reason to remain in the EU, if only to help shape it. The Digital Single Market aims to make shipping more efficient, simplify VAT and provide a more up-to-date framework that is fairer across Europe. It’s an attempt to make it easier for businesses to sell and deliver and give consumers confidence about buying right across the continent. It would be a shame for the UK to be outside of this frictionless market.
The world has changed significantly since the early days of ecommerce and the European Union. The UK may never have much love for the entity of Europe, but for ecommerce companies, a vote to remain is a vote for ease of movement of goods, investment in the UK and access to a huge market.