How Brexit is Affecting Data Centers in the UK

How Brexit is Affecting Data Centers in the UK

The Brexit referendum is more than a year in the past now, but the effects of it are still being seen. In many ways, we won’t know the full impact of this historic vote for many years to come, but we do know that it is having a significant impact on virtually every industry, even data centers.

Specific Impacts from Brexit

The following are just some of the biggest issues that data center companies either have already seen, or are preparing for as the Great Briton moves along the path of exiting the EU:

  • Tech Worker Passports – Many tech workers who support data centers come from other countries around the EU. In the past, they didn’t require a UK passport to come in and work in the country, but that is not going to be the case once Brexit has been completed. Outside of the EU, it will be more difficult for data centers to get the skilled employees they need.
  • Financial Service Industry Impact – Banks and other financial institutions are among the biggest customers of data centers. An isolated UK isn’t likely to attract as many financial sector companies, which could cause the demand to drop.
  • Tech Industry Impact – Tech companies are another big user of data center floor space. When opening new offices, tech companies are likely going to look more favorably on a country that is part of the EU due to more standard and predictable laws and regulations.
  • International Regulations – Data centers rely on a stable system of data lines that can easily cross international borders. Brexit certainly puts additional strain on international relations, which could have an impact on this type of thing.
  • The Unknown – While the tech industry in general and data centers specifically are great at innovating, ‘the unknown’ is still a form of risk. A data center company may not want to invest millions of dollars into a facility when there is still so much they don’t know about the future of the UK.

Potential Opportunities

While there are certainly challenges facing data centers in the UK, there are also some great opportunities. For one, current and potential data center companies operating in the UK can push to influence any new laws or regulations that impact the industry. While it isn’t like the UK is starting from scratch with their government, there will be a lot of change coming, and influencing that change positively is very important.

Some people looking at the UK actually think that the future looks bright for data centers because the UK very well may have reduced overall governmental regulations on this industry. The EU often had to make regulations based on the most restrictive country’s demands in order to come to an agreement. The UK won’t be under any such pressures, and can therefore implement minimally invasive regulations for data centers and related industries.

One key example of a benefit that is already occurring is that the UK government is already providing tax breaks on data centers that meet green energy standards. Data centers have long led the way on green energy due to the cost savings and other benefits, so getting these types of tax breaks is an excellent opportunity and could help to draw more companies to build their data centers in the area.

Moving Forward

As the UK moves forward with their full exit from the EU there will be people in the data center industry who make wild claims saying it will usher in a golden era, and those who believe that ‘the end is near’ for data centers in the country. As with most things in life, the reality is going to be somewhere in between.  Fortunately, the data center industry is extremely resilient and innovative, so it is almost certain that existing companies and those that move into the area will be able to adapt and thrive in the UK once Brexit is fully implemented.