THE BLOG

Brexit and Urban Innovation

03/10/2016 09:31

As an ardent campaigner to 'remain' in the European Union, I, like many others, was hugely disappointed after the 'out' vote. Three months down the line, it's time to take stock. What does this mean for the urban innovation agenda?

The blunt answer is we don't know yet, and we'll have to wait until at least next spring, after the invoking of Article 50, to see the likely shape of our position. It's very much business as usual at the moment - including for the economy - and we have yet to see the changes bite. Economists suggest that the economy will dip significantly next year as input costs rise, and the business investment cycle plays out.

So, plenty of questions remain, but there is some emerging clarity.

Brexit will affect the quality of people we can hire and retain. UK companies have been able to fish in a European-wide talent pool. Here at Future Cities Catapult, a third of our staff are from continental Europe. The very specialised skills needed in the field of urban innovation are not always available within the UK alone. And there is significant evidence positively linking diversity to innovation.

The UK Government needs to act quickly to clarify how we as a sector will be able to continue to access the top international talent. And they need to establish, fast, what will happen to the many excellent EU nationals that are already here.

What relationship will we have to the EU single market? The future cities market is an emergent one. Regulation is often seen as overwhelmingly negative, but it can create market opportunities for agile companies, and build platforms for innovation to take place. The UK is very well situated to shape the urban innovation market. That is why we set up the City Standards Institute, to help both cities as customers and firms as suppliers by establishing new standards. We and the other UK organisations working on standards, will continue to collaborate with Europe, whilst also working in wider international markets.

What of the ability to sell innovative products and services globally? Yes, the lower pound makes the UK offering more attractive. But at the same time, our national reputation has taken something of a knock. Two of the UK strengths were stability and the ability to trade freely across Europe. Not any longer.

Global collaborations are essential to innovation in the 21st Century. Creating the links between UK businesses, UK R&D organisations and markets overseas is vital to unlock inward investment, build future exports and learn from others. EU programmes like Horizon 2020 help foster collaborations across all 27 countries.

Future Cities Catapult works with many European cities - like Aarhus, Milan, Lisbon and Santander - through our EU networks. We would very much value being able to continue to participate in some way in Horizon 2020. There should also be opportunities for funding for bilateral deals with individual EU countries, as well as the drive to develop better links to other crucial markets outside the EU.

We have had welcome reassurances from the UK Government about the Treasury underwriting the payment of competitively won Horizon 2020 projects, even when specific projects continue beyond the UK's departure from the EU. And the Commission has made it clear that proposals from UK applicants must be treated in the same way as applications from other Member States while the UK remains a member of the EU.

And what about after we leave? When the UK contribution of around £8.5bn net a year is repatriated, our Government has choices. UK businesses and research organisations like the Catapults, are currently in line to receive £300m-£400m in EU funds per year. Ring-fencing these monies for innovation should be a priority. And there is an opportunity, then, to apply these funds with a much sharper focus.

As well as these innovation funds supporting ongoing collaboration with Europe, the UK also has the ability to establish global programmes targeted at the organisations, sectors and geographies that would be most fruitful. This might mean reaching out to India, Brazil or the USA depending upon where the best leverage for the UK can be obtained. For urban innovation, there is an opportunity for cities, companies and institutions to engage in new ways on this global stage, and to do even better in developing the products and services for the markets of tomorrow.

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