The Stack Archive Opinion

What Brexit might mean for the UK data centre industry – Part 2

Tue 20 Dec 2016 | Steven Norris

steve-norrisAs Brexit seems to certainly mean Brexit, Steve Norris believes that Theresa May is putting the right wheels in motion before she invokes Article 50…

(Read Part 1 here)

It will be some time before we know precisely what the UK’s exit from the European Union will look like, but we do now know what Theresa May means when she says Brexit means Brexit. The UK will take back control of its borders and if the price we pay for doing so is that we will no longer be a formal party to the EU single market then so be it. She is likely to say that the UK will not impose any tariffs on imports unless the EU does so first.

Trump cards

In bargaining terms, the EU’s trump card is its ability to play hard-ball on the passporting of financial services. The threat is that that passport will be withdrawn when the UK quits the EU, meaning that non-EU banks – now almost all centred in London – will at the very least have to open offices in the EU; moving staff from London to Frankfurt, Paris or Madrid.

The UK trump card is that 20% of Germany’s automotive exports are to the UK and the last thing the Germans want is a tariff war. While the Commission talks tough, the member states are much more pragmatic and recognise that ‘punishing’ the UK for leaving will be a classic case of cutting off the nose to spite the face.

Mrs May has made clear that she will resist calls from some, like ex-Tory leader Iain Duncan Smith, to invoke Article 50 now. She believes we need to get our collective ducks in a row before starting the formal two-year negotiating period; she knows that time spent in reconnaissance is seldom wasted. David Cameron’s failed effort to get any real concessions out of the EU prior to the referendum cannot be repeated, and she is emerging as a figure of substance garnering respect from friend and foe alike.

Faith is restored

Meanwhile for the data centre industry signs are that companies are simply continuing to do business. While a few investment decisions were understandably put on hold, overseas investors now appear increasingly willing to take advantage of better exchange rates to buy into the commercial market as the referendum dust settles.

Chancellor Philip Hammond’s first budget is likely to stress our objective to be seen as the most competitive and dynamic economy in Europe. Hard data suggests the threat of recession and economic collapse were wildly overstated and that consumers and investors alike have more faith in this country than we may have given them credit for.

The referendum result may not have been what many in the industry wanted but we now look to a government led by real grown-ups to show the world that, in or out of the EU, this country is still a great place to do business.

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-the-art 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.

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