Since 2019, patients in the UK have been able to book GP appointments through the myGP app, which now has more than two million users. The company behind myGP, iPlato Healthcare, entered America’s much larger healthcare market seven years ago, but its US operations have struggled to grow, and account for less than 2 per cent of its overall revenue.
The reason for this is that data protection requirements and health procurement systems change across borders, explains Tobias Alpsten, iPlato’s CEO. “There are major regulatory challenges,” he says. “Effectively you have to rebuild your platform for every country.”
Many UK businesses struggle to export their digital innovations, and it’s partly due to a lack of international consensus on digital trade. The government has made ambitious statements about putting digital trade at the heart of the post-Brexit strategy, making the UK a “leading global voice” and “the intellectual driving force” behind digital trade, in the words of International Trade Secretary Liz Truss.
But the government is yet to set out a clear strategy, says Beatriz Kira, senior research and policy officer at University of Oxford’s Blavatnik School of Government: “There’s a lack of data, a lack of analysis, and a lack of participation and transparency in terms of which groups have access to the decision-making process.”
[See also: Why Brexit could benefit the UK’s tech sector]
This has not stopped the UK from negotiating trade deals with digital provisions. Its trade deal with Japan, as well as application to join the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), contain commitments on digital trade.
These commitments suggest the UK could align itself more closely to the US vision of digital trade, which prioritises the free flow of data and the protection of intellectual property. The EU’s approach puts citizens’ data rights first, but there is “a lot the UK has to lose in terms of not being aligned with the EU”, says Kira.
Weaker alignment with the EU for digital tech businesses has already had consequences. Around a fifth of UK businesses exporting “telecommunications, computer and information services” say their exports are lower than they would expect so far this year, according to ONS data.
Kira points out that in applying to join the CPTPP, the UK is aligning itself with the agreement’s “very prescriptive” treatment of how companies such as Facebook and Twitter can be held liable for the content others post on their platforms. This is an area the UK is still debating, as part of the Online Safety Bill, and the country has yet to find its own balance between regulating and growing the digital economy.
It is clear why the UK is prioritising the US, a digital trade heavyweight that exported almost $65bn in digital services and technology in 2019 and consistently ranks first for digital trading opportunities on the Global Opportunities Index.
Business owners are also keen for the UK to focus its energy on the US. “It’s a market that’s going to be really important for the UK,” says Aneesh Varma, founder and CEO of credit fintech start-up Aire. “Whatever we can do to help get that alignment, the faster the better; an imperfect deal today is still better than the super-perfect deal five years from now.”
The UK already punches above its weight for digital service exports. While it accounted for around 3 per cent of global GDP pre-pandemic, the UK facilitates 11.5 per cent of the world’s cross-border data flows and ranked fifth in 2019 for digital tech services exports, according to ITC data. “The UK is a trading nation… [and] data is actually what the UK trades in,” says Julian David, CEO of industry group techUK.
While finance dominates the UK’s trade in services, digital tech was the fourth-biggest sector for services exports in 2019 and has grown at a faster rate than finance, travel and transport over the past five years, according to a Tech Nation report.
As the economy becomes increasingly digitised, the UK should attempt to replicate the success it has had combining its world-leading finance and tech sectors in other parts of the economy, says David, citing deeptech (that for substantial scientific and engineering problems), edtech (education) and healthtech as potential growth areas.
“The ones that are going to really grow are the ones where you’ve got capability, and you’ve got deployment,” he says. Healthtech, he says, is a good example. “We have fantastic research and development, as we showed in the vaccine development, and you ally that with huge deployment, which you can do through the NHS, [and] then all of a sudden you can actually grow a huge industry.”
But David says a focus on trade is necessary for companies to achieve scale: “If you don’t plan to go global, then you’re really planning not to exist in the medium term, because the digital industry… [is] global by nature.” The UK already leads on digital tech innovation, with 7,500 high-growth digital tech start-ups and scale-ups that operate in international markets, according to Tech Nation.
At the same time, innovation must be balanced against regulation to build trust, so that entrepreneurs have “a legal base on which to build products that they know are going to endure”, says David.
For this to happen, it’s crucial to retain regulatory sovereignty, says Aneesh Varma. One way to do this is by setting an example: the UK is an international leader on digital regulation because of the “open and innovative” approach adopted by the Financial Conduct Authority (FCA), which has become a “model of how to export regulation”, he says.
[See also: Pubs and cafés are back – but the UK economy will be slow to recover]
But even with a coherent digital trade strategy for areas like regulation, the UK’s ambitions could be undermined by the rising tide of protectionism. Almost a third of countries on the OECD’s Digital Trade Restrictiveness Index have become less open to trade between 2015 and 2020, compared with only 4 per cent becoming more open.
Protectionism “is the biggest threat” to the UK as it negotiates its new international relationships, says techUK’s David. “Trade is what has created the wealth that we enjoy,” he says. “[So] what we must do is make sure that countries don’t start to erect protectionist barriers, because [then] you move from what is a pretty good win-win to a lose-lose… [and] you will stifle that growth.”
Content from our partners
Related
