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We need clarity on how Brexit will affect Britain's place in the digital single market

The UK's lead in technology will be undermined if we can't trade across cyber borders.

Brexit currently dominates the UK’s political conversation, as MPs begin to debate in detail what form it will actually take. Necessarily so – since there are growing tensions surrounding the government’s position on the customs union, single market access, Euratom and EU citizens’ rights.

The EU's digital single market (DSM) remains less debated. Yet the success of our country’s technological advancement and much that will drive future growth and prosperity depends on it.

Currently, the UK is the strongest digital tech player in the EU. Comprehensive analysis by Tech Nation says the sector is worth more than £160bn to the country – and investment reached a height of £6.8bn in 2016, 50 per cent more than any other European country.

We have 1.6m employed in the tech field, with an average salary of £50,000. Although Britain lags behind Europe in overall productivity, that is not the case for the technology sector, which is growing two times as fast as the non-digital sector. The tech industry grew 32 per cent faster than the rest of the economy between 2010-14.

A future outside the DSM will clearly bring risks to growth and jobs. The EU is planning to adopt a package of measures to enable unfettered online trade in services, capital and goods between the European Union member states. The new DSM rules focus on removing barriers to cross-border services trade, and harmonising consumer protection rules so that people can be confident of their rights if they purchase goods or services from another member state. They also focus on delivering the rules on, and investment in, cyber-security necessary to make this trade secure. 

If successful, the DSM will become one of the largest and most valuable trading markets for global online businesses. The European Commission values a fully functioning DSM at €500bn – worth an additional €415bn to the EU economy. That holds the potential to save EU citizens approximately €11.7bn each year in online shopping.

With the UK outside the DSM, UK firms may face barriers in cross-border online trade. Firms outside the single market are not allowed to process EU customers’ personal data unless there is a special agreement with the EU. It seems evident that a "no deal" Brexit would prevent any such agreement. Even if such a special deal were granted, UK-based companies could only participate in the DSM if UK consumer and data protection rules mirrored those of the EU.

Nonetheless, EU citizens might be reluctant to buy online from UK companies if one of the government’s red lines continues to apply. If the UK were not part of the same legal regime, someone in Maastricht who buys what turns out to be a shoddy product from a company based in a UK city will have to try to enforce their rights in a court in that city. Under the DSM, they can enforce their rights where they live.

The DSM is also about making the rules which apply to telecoms providers stricter and more consistent across member states. This is important as telecoms products are the physical links over which e-commerce takes place. More ubiquitous and lower-cost broadband access means more people can participate in the digital economy as both buyers and sellers.

However, the importance of stricter and more consistent telecoms regulation goes wider than the relationship between e-commerce and underlying networks. The entire backbone of global supply chains is based on the ability of computers to communicate rapidly and securely across borders. It's well known that parts for British car production move back and forth across the Channel before final assembly in Sunderland and Oxford, but that whole process is also dependent on telecoms backbones.

Economists used to think that goods could be exported but services could only be consumed locally. Nowadays, it is widely recognised that services, like telecoms, are deeply embedded in goods production. We are all consumers now of foreign services even when we buy domestic goods.

Brexit does not mean that telecoms backbones cannot continue to communicate. What it does mean is that if the UK telecoms regulatory system or standards start to diverge from the European ones, that it becomes more difficult and more costly to ensure seamless connectivity across the backbone which joins the supply chain. And if that starts to happen, it is another reason for a company to consider whether it’s really wise to invest in the UK.

By breaking down trade barriers online, we will encourage a generation of investors and entrepreneurs to work within the UK, alongside Europe. A European Commission study shows that only 7 per cent of SMEs in the EU currently sell cross-border, while 57 per cent of EU companies say they would either start or increase their online sales to other EU member states if e-commerce rules were applied across the EU.

If the government wishes to harness and attract talent from all over the world and keep us at the front of the pack, it needs to address the issues at hand. The House of Commons Business, Innovation and Skills Committee concluded that we have yet to see what the government’s digital strategy would look like post-Brexit. The longer Theresa May and her team leave these questions unanswered the more uncertainty will creep in and push industry from our shores.

The digital age is upon us, and the single digital market offers the UK the opportunity to be at the forefront of Industry 4.0, building upon our existing leadership within the digital sector and services. A commitment to pursuing a fully-integrated digital single market will guarantee growth for UK businesses, creating jobs across every region of Britain. Leaving the DSM would be a giant leap backwards.

Seema Malhotra is Labour MP for Feltham and Heston.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.