Brexit is ‘pressing snooze’ on innovation: the impact of Brexit on the tech sector

Brexit is 'pressing snooze' on innovation: the impact of Brexit on the tech sector
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What is the impact of Brexit? Almost a third of businesses admit delaying innovation projects due to political uncertainty, new Schneider Electric research reveals.

Brexit is responsible for holding up hundreds of innovation projects, new research from Schneider Electric has found. The automation and energy management company found that almost a third of businesses (31%) claimed to have delayed projects in the last 12 months and more than one in ten (13%) had cut budgets for key projects, including those aimed at tackling sustainability, due to the impact of Brexit and the political uncertainty it brings.

The research findings, published in a new report, Rethink Energy, examined the behaviours, priorities and investments in relation to sustainability of 400 large business, 120 SMEs and 2,000 consumers in the UK. The Schneider Electric commissioned study revealed that whilst sustainability is now firmly on the boardroom agenda, the number of businesses choosing to delay projects has increased 25% in the last two years. At the same time, the number of businesses fearing that the cost of implementing sustainable working practices will impact profits, has also sky rocketed.

“It is going to take hundreds of billions of pounds to decarbonise Britain and achieve the UK government’s net-zero 2050 target, a target which we fully support. It is clear that the government is looking to the business community to fund a significant portion of the investment required, and alongside cost there is also opportunity. But as our research clearly shows, no business is going to risk committing millions of pounds to projects, particularly those involving new technologies without a stable environment in which to invest,” commented Mike Hughes, Schneider Electric Zone President UK & Ireland.

With the impact of Brexit, tougher times are ahead

The vast majority of businesses (84%) are anticipating a tougher economic outlook ahead, up from just under three-quarters (71%) in 2017. Whilst businesses view sustainability and efficiency as a long-term necessity, 74% fear that implementing sustainable working practices will have a negative impact on their bottom line, up from 54% in 2017.

85% of business leaders reported feeling torn between doing the right thing for society and doing the right thing for the performance of their business. Though in reality the two are not mutually exclusive. Schneider research has demonstrated the average project aimed at tackling waste energy pays for itself in three years, and a 30% reduction in energy use typically equates to a 10% reduction in operating costs.

The role for government

Eight out of ten businesses (81%) reported that access to government grants or funding would help drive sustainability and energy efficiency projects.

The biggest drivers of sustainability initiatives for large businesses are long-term financial stability and improved brand reputation, whilst meeting government sustainability targets and helping to mitigate climate change were also top five drivers.

SMEs were (six times) more likely to make changes to their business to reduce their impact on the environment only if legislation demands it. Suggesting a tougher line from government may be required sooner rather than later to drive large-scale change.

For consumers the rising cost of energy bills is the number one incentive to reduce energy consumption, with financial incentives from government the number two driver for change.
Reducing the impact of carbon emissions for future generations is now a key consideration for a third of the British public (34%) up from 25% just 12 months ago. This is still a relatively low percentage considering the scale of public support to accelerate climate action as demonstrated for example via the school strike movement.

“A range of measures are required for the UK’s transition to a zero-carbon economy. A stable economic and political environment is vital, but education must also be a priority. Whilst the long-term goal is to ensure a sustainable future for generations to come, we must take immediate steps to eliminate waste and drive energy efficiency in businesses, infrastructure and homes. We need to completely rethink our relationship with energy, removing all barriers in our path. We have the means, now we need the will to match,” continued Hughes.

EU funding is still available to the UK

The Budget Committee approved a measure to make sure that EU funds for 2019 and 2020 are fully available if the UK leaves the European Union without a deal. The draft regulation extends to 2020 the contingency plan approved by European Parliament on 17 April 2019, previously limited to 2019.

The aim is to minimise the negative impact of Brexit for beneficiaries of EU funding and for the European Union budget in the case of a no-deal scenario. The measure includes programmes such as Horizon 2020, Erasmus+ and agriculture and regional policies.

The proposal would make it possible to continue payments to UK beneficiaries throughout 2020, provided the UK continues to pay its contributions and accepts the necessary controls and audits.

The draft recommendation by rapporteur Johan Van Overtveldt (ECR, BE), Chair of the Committee on Budgets, endorsing the approval of the proposal, was adopted with 26 votes in favour, four against, and three abstentions.

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