After multiple terror attacks, a snap election with a surprise result, and a devastating fire in London, UK officials had plenty on their minds going into the the start of Brexit negotiations last month. They are tasked with brokering an exit from the EU at the same time that the British economy is showing signs of stress. It was the worst-performer among all advanced economies, with a paltry 0.2% growth in the first quarter of 2017, accompanied by a fall in the value of the pound and rising inflation.
Would a Hard Brexit Cripple the EU’s Digital Economy?
With multiple terror attacks and a snap election, called by Prime Minister Theresa May, the government and residents of the UK have had plenty on their hands. After today’s vote for the next British government, the Brexit process – the UK’s departure from the EU – is expected to continue. All of this comes as the British economy is showing signs of stress. It was the worst-performer among all advanced economies, with a paltry 0.2% growth in the first quarter of 2017, accompanied by a fall in the value of the pound and rising inflation. So one might assume that when Brexit talks begin June 19, and they are billed as “the most important negotiations in the country’s history,” the UK is negotiating from a fractured position. This isn’t the case on a few fronts, but especially if one considers the digital economy.
In the digital economy landscape, the EU would be losing a genuine star. This important because the digital sector is one of the most dynamic and innovative elements of the economies of the UK and the EU – and of countries anywhere; in the UK alone it accounts for 16% of domestic output, 10% of employment, and 24% of exports. We studied the UK’s performance along four critical dimensions of supply, demand, institutions, and innovation. in comparison to the other European counterparts. We found that the UK performs better on these four dimensions relative to its most significant peers. As Brexit negotiators consider these issues, they should consider what impact the UK’s exit from the EU will have on the flow of data and the wider digital economy.