Keep up with the latest developments and legal issues in the telecommunications and emerging technology sectors, with exclusive access to a comprehensive collection of telecommunications law news,...
Yoyo Wallet prides itself on being a global company after just four years in business.
But Brexit is casting a shadow on the London-based mobile payment company’s international ambitions.
Yoyo Wallet has raised more than $10 million in venture capital and is expanding in Asian and U.S. markets. But more than half of its product and engineering teams are non-British. The U.K.'s move to leave the European Union has Yoyo Wallet worried that it will be tougher to recruit high-tech talent from continental Europe.
“In the U.K., there aren’t enough engineers, so what do we all do?” Yoyo Wallet co-founder and chief executive officer Alain Falys, a French native, told Bloomberg BNA. “The tech environment here is incredibly active, and we’re all competing for engineering talent, not just fintechs.”
British tech startup executives say that their biggest policy issue is access to talent, according to a survey by the London arm of U.S.-based Silicon Valley Bank. The executives cited concerns about the ability of their non-British employees’ futures in the U.K as the top post-Brexit issue facing their businesses. U.K. Prime Minister Theresa May has said the free movement of migrants across EU borders, one of the bloc’s cornerstone principles, will be restricted when the country negotiates its divorce from the EU.
Britain’s House of Lords March 1 voted to allow EU citizens in the U.K. to be able to stay after the split. It’s unclear if this amendment to a draft bill that would trigger Brexit negotiations will survive.
British voter worries that continental European immigrants were taking U.K. jobs and resources spurred the decision to cut ties with the EU. But the country’s financial technology industry, which saw more than £20 billion ($29.6 billion) in revenue in 2015, is lobbying the British government to maintain access to high-skilled foreign labor.
More than 30 percent of U.K. fintech founders and executives are non-British, according to member data from Innovate Finance, a U.K.-based fintech trade association. The industry is hoping the government prioritizes high-skilled worker access over other types of immigration and recognizes the need for adequate inflows of talent.
“It’s a massive issue, given the number of professionals that are here,” Mike Laven, chief executive officer of international payment and currency platform Currency Cloud, told Bloomberg BNA.
Laven said between 20 and 25 percent of his employees were EU workers from outside the U.K. Other fintech startups are even more dependent: small business lending platform iwoca counts about half of its staff from outside the U.K., with the majority of them from Europe.
To be sure, U.K. companies are still worried about other Brexit-related issues. But fintech trade groups and entrepreneurs say access to talent from elsewhere in Europe has become their biggest concern since the June referendum in which 52 percent of U.K. voters approved leaving the EU.
Currency Cloud and other companies are adapting to what they initially thought would be big challenges, including access to EU markets through a financial licensing agreement known as passporting.
“The expectations of the world falling apart post referendum haven’t occurred,” Laven said. “My greatest concern for our particular business is not so much passporting as it is access to talent.”
May is expected to trigger Article 50 to begin exit negotiations with Europe at the end of March, initiating an onslaught of trade talks with the EU that could last up to two years. The government plans to consult with businesses in the months that follow on options for restructuring migrant worker rules, but free movement of people “as we know it” will end, Amber Rudd, U.K. home secretary said in a television interview Feb. 26.
The fintech industry employs more than 61,000 people in the U.K., according to a 2016 EY report commissioned by the U.K. government. About 26 percent of all computer programming and consultancy workers in the U.K. are foreign born, according to the Migration Observatory at the University of Oxford.
May’s January call for a hard Brexit—one that would strip the country of not only union membership but also any affiliation from the broader European single market, which includes countries like Norway and Switzerland—has further stoked concerns. Some fintech leaders said they’re worried that, without ties to the EU’s market, the U.K. government will clampdown on all immigration without provisions favoring high-skilled workers that they say grow jobs and the economy.
British citizens have long been wary of influxes of foreign workers from EU countries and elsewhere. About three-quarters of them favor at least some reduction of overall immigration, according to the Migration Observatory.
Brexit proponents argue that too many foreigners are taking U.K. jobs and draining resources, especially as unemployment rates across much of Europe soared after the global recession. The share of foreign-born workers in the U.K. increased from 7.2 percent of its workforce in 1993 to 16.7 percent in 2015, the university’s report said. Attitudes were more favorable toward high-skilled workers, however, the Oxford study noted.
David Davis, the U.K. secretary of state overseeing Brexit, said Feb. 13 it wouldn’t be in the U.K.’s interest to cut off foreign high-skilled labor in the way President Donald Trump’s has moved to in the U.S.
Davis said he wants to make sure EU citizens in the U.K. can continue to work while Britain moves to welcome other skilled workers in needed industries. But fintech founders continue to wonder if Britain will be able to balance the tech industry’s call for talent with anti-immigration clampdown trumpeted by the populist movement that caused Brexit in the first place.
“What remains is a very, very large amount of uncertainty,” iwoca co-founder and CEO Christoph Rieche told Bloomberg BNA.
To contact the reporter on this story: Michaela Ross in Washington at email@example.com
To contact the editor responsible for this story: Keith Perine at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)