International Business|'Brexit' May Hurt Britain Where It Thrives: Science and Research

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at 2016.10.18
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International Business|'Brexit' May Hurt Britain Where It Thrives: Science and Research

LONDON — When Adam Durant started his company analyzing climate-related threats to aircraft, he and his team of researchers symbolized the possibilities offered by the European Union.

Soon after graduating from college, Mr. Durant received a prestigious European Union grant to study atmospheric chemistry and conduct climate-related research. When he started his business, he hired staff members from Belgium and France without having to sponsor their visas.

But since Britain voted in June to leave the bloc, Mr. Durant has become the archetype of something very different: a nervous entrepreneur, unsure about future funding and even considering leaving the country.

His worries mirror those of the British business community at large, and the concerns appear to be weighing on the country’s economy.

Technically, nothing has changed since the referendum. But a vast number of questions remain, including the shape of Britain’s future trading relationship with the European Union and the long-term rights of European nationals now working in the country.

The widespread uncertainty, and the challenges that arise from it, are acutely felt in the scientific community, dependent as it is on long-term funding, cross-border mobility and international collaboration.

“It’s probable that the opportunities that existed pre-Brexit won’t exist next year,” Mr. Durant, 37, said. “Things are becoming more difficult.”

Britain has long been a global leader in scientific research because of world-class universities that produce top scientific papers.

In particular, the country excels at health sciences and advanced engineering, areas that have thrived partly because of factors tied to Britain’s membership in the bloc.

Though much of the debate before the referendum focused on Britain’s financial payments to the European Union, the science sector has unquestionably benefited from membership, receiving net contributions of 3.4 billion euros, or about $3.7 billion, from a variety of European Union programs from 2007 to 2013.

Interactive Feature | How ‘Brexit’ Could Change Business in Britain Several months on, little is clear. Britain’s trading relationship with the E.U. looks to be in limbo. Companies are reassessing their long-term investments in Britain. Here’s what’s happened so far.

European Union money accounted for 40 percent of funding for cancer research in Britain over the last decade, according to Digital Science, a consulting firm based in London. In nanotechnology research, that figure is 62 percent, and in evolutionary biology, it is 67 percent.

Those resources have plugged the gap in falling British government funding, adjusted for inflation, and low levels of investment from Britain’s private sector, figures from Digital Science show. British businesses contribute the equivalent of 1.06 percent of their country’s gross domestic product toward research and development, 80 percent less than what German companies contribute toward research and development in Germany.

The country has also attracted talent from across Europe. That is largely because of the relative ease of doing business in Britain, coupled with ecosystems developed around top universities, and that the bloc’s free movement of labor means no citizen of a European Union member country requires a visa to work in Britain.

Around 30,000 scientists and researchers from member states are employed by British universities — equivalent to 20 percent of their teaching and research staff — and a full 60 percent of research papers in Britain are written with partners in the European Union.

All of those factors are crucial to Mr. Durant and his fledgling business.

After getting his degree, he went on to obtain a Ph.D. In 2007, he received a Marie Curie Fellowship, which finances research across the bloc. Then, after the eruption in 2010 of an Icelandic volcano that disrupted global air travel, he started Satavia.

The company was founded in 2013 with initial funding of €500,000 from the European Space Agency — which is partly funded by the European Union and works closely with the bloc — along with a promise of up to €4 million more. Satavia, which helps aircraft detect threats like ice and volcanic ash, now employs four scientists in Cambridge.

“European funding has been critical to the success” of the company, Mr. Durant said.

But shortly after the Brexit vote, he was turned away from a research network involving European partners. He has since stopped writing research proposals because of the uncertainty. He is even considering moving Satavia’s headquarters from Britain.

His experience is not unique.

C-Tech Innovation, a company focused on energy efficiency and renewables that is involved in 15 energy and biotech projects funded by the European Union, has similar worries.

The company has 44 employees and is based in the northern town of Chester. Without the funding, its model “would not operate,” said Rob Bell, C-Tech’s director of research and innovation. Businesses tend to shy away from the early stages of a technology because of the high risk involved, Dr. Bell explained, and that gap is generally plugged by European money.

Some companies are already moving, like Herba Invest, a small drug company in southern England that is relocating to Spain.

Interactive Feature | Background on Britain’s E.U. Decision The country has voted to leave an economic and political union of 28 nations intended to deliver peace, stability and prosperity.

Across the industry, 40 foreign researchers have turned down positions or are thinking of doing so, while another 100 are planning to leave Britain or have already left, according to Scientists for E.U., a British group that is campaigning to keep the country in the bloc. In all, it has logged 371 such “adverse effects.”

Though those figures may be low, some worry they may be a harbinger of things to come.

There are also fears that the European Medicines Agency, which has overseen regional drug approvals since 1995 from its offices in London, could move to the Continent once Britain leaves the European Union, and drug companies could follow suit to streamline the regulatory process.

Some research outfits also worry they will lose access to European researchers.

“Mobility of people drives the issues and with that the mobility of ideas, of investment,” said Keith Burnett, vice chancellor of the University of Sheffield, a major recipient of European Union grants, particularly in evolutionary biology, physics and astronomy. Building a scientific community, he said, is like building a city.

A lot will depend on how the government of Prime Minister Theresa May negotiates for Brexit.

It has so far given assurances that it would safeguard the scientific community’s funding, at least through 2020. Supporters of Brexit have also said that the government can use money that would otherwise have been sent to Brussels on scientific research.

But as the negotiations get underway — Mrs. May has said she will start formal talks on leaving the European Union by the end of March — that could all change.

She has said that Britain would not accept the bloc’s rules that allow the free movement of labor. And despite pledges of financial support from pro-Brexit politicians, promises have been made to spend on causes that have broader appeal, like Britain’s National Health Service. An expected slowdown in economic growth could also hurt tax receipts, putting still more pressure on the budget.

In a sign of growing anxiety among academics, a conflict recently erupted between the London School of Economics and the government when the university said it had been instructed to bar non-British academics from advising the government on Brexit negotiations. Britain’s Foreign Office has, however, denied the report.

But not everyone is downbeat. Some are even raising their bets, like the British pharmaceutical company GlaxoSmithKline, which has said it will invest 275 million pounds, or $341 million, in Britain.

Darrin M. Disley, the chief executive of the Horizon Discovery Group, a biotech company in Cambridge, supported Britain remaining in the European Union. But even after the result, he said the country could find new opportunities further afield.

“If you’ve got the innovation, the right links to universities, the right links to industry, the right entrepreneurial environment, the right funding, that’s an outstanding recipe,” he said.

“The concern is will the government fill the gap in funding?”

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Published at Tue, 18 Oct 2016 00:00:00 +0000

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