For security players, the impact of Brexit would mostly come from three areas: movement of people, trade and business confidence.
On June 23, Britons voted to leave the European Union in a historic referendum. The move subsequently sent shockwaves across globe as people struggled to absorb its meanings and implications. Even with a new UK prime minister set to take office this week, all eyes are still watching how Brexit will affect the future of Europe and the global economy.
As for security, most European players we spoke with said the demands will always be there whether U.K. stays in or out. For them, the impact of Brexit would mostly come from three areas: movement of people, trade and business confidence.
Since U.K. needs workers from the rest of the continent, possible restrictions over the movement of people resulting from Brexit may become an issue. "Across engineering, sales, marketing … every discipline you can imagine, we do have a UK skills shortage. So if we don't have free movement of people across Europe, that means we can't be here in U.K. and hire someone from Spain. We could, but all of that would have to be figured out in the medium to the longer term,” said Billy Hopkins, Technical Manager at IDIS Europe.
In terms of trade, U.K. will have to renegotiate with the EU over tariffs and other trade-related issue, and this is likely to be a prolonged process. “Negotiations between the EU and Britain are likely to take more than two years, and the creation of trade deals between the U.K. and the rest of the world may take more than 10 years to conclude. Within the next 12 months, to what extent the negotiating parties are prepared to compromise will become clearer,” Gartner said in a research note.
Security players see trade as an impact, though it would be limited. “If we exit from the EU, I don't think the duties will change greatly because U.K. actually buys more from EU than the EU buys from us,” said David Montague, Security Sales Director for EMEA at FLIR Systems. “If you consider that we take a lot of products from German car manufacturers, I don't think the Germans then will say we'll put high tariffs on your products coming to Europe.”
Peter Ainsworth, Director of Product Marketing and Management for EMEA at Tyco Security Products, echoed Montague’s remarks. “If we broke up, Europe won't propose a car tariff on UK cars, because Germans won't be able to sell BMWs to U.K. It's not in their interest,” he said. “I don't believe it will affect the security or our industry.”
According to these players, it’s the uncertainty that might create the most impact, as people take a wait-and-see attitude and put investment and spending on hold. Already, Gartner pointed out Brexit will lower 2016 UK IT spending by 2 to 5 percentage points to negative growth, and U.K.’s 2017 IT spending growth will be negative as well. While this is IT spending, the uncertainty bodes badly for spending on security as well.
“It's creating a cautiousness in the market. Just over these last few months it has developed a bit of cautiousness,” said Gareth Ellams, MD for Access Control at ASSA ABLOY.