What Brexit might mean for the UK data centre industry
Fri 15 Jul 2016 | Steven Norris
Former Conservative MP Steve Norris, now chairman of Virtus Data Centres, speculates about how Britain’s secession from the European Union might impact the country’s thriving data centre industry…
It was a very close run thing. While London voted to remain, the rest of the country was much less persuaded. Having put himself front and centre of the Remain campaign, David Cameron had no alternative but to resign. It is a bitter pill for the man who took the Conservatives into a coalition government with the Liberal Democrats in 2010 and produced a Conservative majority government five years later.
In truth, the referendum demonstrated the enormous lack of trust ordinary people have in the political and business establishment. They simply didn’t believe them. And with the key issue for so many voters being the control of immigration, they must have felt the prime minister’s promise to reduce migration to tens of thousands was patently undeliverable. Cameron’s successor will be in place by the end of September and only then will the new prime minister trigger Article 50, which signals the start of the formal negotiations with the EU over our exit.
So what does all this mean for the UK data centre industry? Some investors may undoubtedly pause their decisions and some may look elsewhere but the early signs are that the markets will not panic. Sterling has fallen against the dollar, which makes U.S. investment here significantly cheaper. It has lost a few cents against the Euro, but nothing of any magnitude. After an inevitable dive on day one, the FTSE has regained much of those losses and, as any shrewd investor knows, that kind of drop creates buying opportunities.
And what of those exit negotiations? Much will depend on who is doing the negotiating, but it is important to distinguish between the EU bureaucrats who are desperate to hold their failed model together and talk of threats and punishment, and the serious EU leaders such as Angela Merkel, who understand that the UK is the world’s seventh (not fifth as so often stated) largest economy and worth 20% of German automotive exports.
Both parties need each other and share a common interest in getting a sensible deal signed and sealed at the earliest opportunity. We need calm heads and firm resolve on all sides.
Meanwhile nothing has changed. There are no new border restrictions, no new tariffs and, as yet, no signs of the chancellor’s threatened draconian cuts and tax rises. Ironically, a cut in corporation tax to 10%, as suggested by Rohan Silva, the former advisor to Number 10, would galvanise the economy and send a clear message to those outside the UK that as ever, this is a country that is open for business and investment. Keep calm and carry on is still the best advice.
Steve Norris was a Conservative member of parliament for 14 years and minister for transport for five years. He had earlier served as parliamentary private secretary at the Departments of Environment, Trade and Industry and the Home Office. He retired from the Commons in 1997 and was twice his party’s candidate for mayor of London. He is chairman of Virtus Data Centres, operators of four state-of-theart colocation facilities in London. He is also chairman of BNP Paribas Real Estate and of Soho Estates. As president of the Data Centre Alliance, the data centre industry trade body, Steve plays a pivotal role in highlighting just how immensely important the data centre sector is to the ongoing sustainability of the digital age we now live in.