The EIU market briefing explores specifically the app economy in Europe, and how it may be affected by the Brexit vote on June 23rd.

1. © The Economist Intelligence Unit Limited 2016
Europe, including the UK, views the technology sector as important to its
economic growth, according to a recent survey of government officials.
And, officials say, governments are implementing a range of measures
to support the app economy, most of which app executives find helpful.
According to a set of recent surveys by the Economist Intelligence Unit, 85% of government
officials surveyed in economically developed regions—Europe, Asia and North America—
deem the technology sector as important (54%) or crucial (31%) to economic growth. Looking
at the fast-growing app economy segment of the tech sector, European officials say they plan
to be more active than their peers in other regions in providing support for app companies.
For instance, while 47% of government respondents around the world say that they plan to
update or streamline regulations to enable the growth of app-based businesses, 57% of
European officials say they provide this kind of support. Other types of support include
improving infrastructure for better connectivity, providing initiatives for global expansion and
directly investing into app-based companies.
Europe’s app economy
A market briefing
from The Economist
Intelligence Unit
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How important is the technology sector overall in driving economic growth
in your jurisdiction?
% of government respondents from each region
Europe
Asia-Pacific
North America
Source: Economist Intelligence Unit survey, 2016.
0 20 40 60 80 100
Crucial Important Average Minor

2. © The Economist Intelligence Unit Limited 20162
Market briefing
These efforts yield notable benefits in citizen engagement and public services, respondents
say. One-third of government respondents in Europe believe that the app economy has
helped governments provide better service to citizens; it was the most frequently cited way
that the app economy is making a positive impact on their jurisdictions.
The economic impact of the app economy, however, appears to be a work in progress in
Europe. Only 12% of European government respondents report that the app economy has
increased employment or new job growth in their jurisdiction (in contrast to 29% from Asia-
Pacific). And, officials in Europe, unlike those surveyed in other regions, don’t believe that the
dearth of technical talent resulting from the lack of educational opportunities is a major barrier
to the app economy’s growth. That said, building the workforce of the app economy and the
tech sector overall will almost certainly become increasingly important for governments and
companies alike: The European Commission predicts a shortage of 825,000 people to fill jobs in
the sector by 2020. The biggest barriers in growing the app economy in Europe that
government officials do cite are lack of public and private funding along with the low priority
given to technology within the economy.
0
5
10
15
20
25
30
35
In which areas has the app economy had a positive impact in your jurisdiction?
% of government respondents from each region
Better service to citizens Increased employment or
new job growth
Connecting citizens
to government
Source: Economist Intelligence Unit survey, 2016.
Europe North America Asia-Pacific Total
What are the biggest barriers to the growth of the app economy?
% of government respondents from each region
Europe Asia Pacific North America
1. Lack of public funding – 48%
2. Low priority for technology in
the economy – 29%
3. Lack of private funding – 24%
1. Lack of talent due to
educational opportunities – 48%
2. Lack of public funding – 33%
3. Lack of talent due to
emigration – 26%
1. Lack of public funding – 37%
2. Lack of private funding – 29%
3. Lack of talent due to
emigration – 29%

3. © The Economist Intelligence Unit Limited 20163
Market briefing
What do European executives think of their app economy? European app businesses
generally find government activities helpful to their growth. Initiatives that both entrepreneurs
and enterprise executives find especially helpful include providing relevant social support for
employees, and improving connectivity and community activities. Notably, these are among
the most frequently cited activities by officials. Government activities that were cited as
helpful least frequently include updating or streamlining regulations to enable business growth
and buying app services.
Looking at business-to-business relationships, European enterprise executives are relatively
relaxed about European app start-ups. They, more often than start-up executives, say they
benefit from collaboration—33% of enterprise executives say that working with one or more
start-ups was very helpful to their growth, while only 18% of entrepreneurs say that working with
enterprises was very helpful. European enterprises most commonly partner with start-ups
through sponsorship of events; technology integration and business partnerships (such as
those for reaching new customers) are cited less often by executives in Europe. The last two
typically bolster companies’ long-term success, and they are the two most common types of
partnerships cited by enterprise executives outside Europe, whereas start-up executives more
often find partnering with enterprises useful.
Finally, compared with enterprise executives in other regions, European enterprise executives
are less worried about competition from start-ups. Forty-five percent of executives in Europe
say they expect the threat from app start-ups would increase in the next two years, compared
with 69% of executives in Asia and 61% of executives in North America.
All in all, the survey suggests that European enterprises might benefit in the long run from
making their collaborations with start-ups more helpful to the start-ups. Even if doing so
increases the risk of competition, it would also likely help Europe’s app economy as a whole
grow faster and create more economic benefits for the region.
0 5 10 15 20 25 30 35
How helpful are specific government acitivities to the growth of your business?
% of start-up and enterprise respondents in Europe who stated government activities were “very helpful”
Provide specific, relevant social
support for employees
Provide changes in public infrastructure
that improve connectivity
Update or streamline regulations to
enable business growth
Provide initiatives for international
expansion
Provide education, scholarships or
research funding to improve tech talent
Provide direct investment
Organise or facilitate community activities
Buy app services for internal processes
or better engagement with the public
Source: Economist Intelligence Unit survey, 2016.

4. © The Economist Intelligence Unit Limited 20164
Market briefing
Europe’s app economy and Brexit
In the aftermath of the Brexit vote on June 23rd, hotspots of activity in the app economy
may shift in the long term, especially from the UK to continental Europe. Currently in
London, for example, “[there] is a huge pool of talent—talent in entrepreneurship,
innovation and product design—married with seasoned advisers in finance, law and the
start-up scene”, says Simon Briskman, partner at London-based Fieldfisher, a tech-focused
law firm. “That is not going to disappear. However, larger financial institutions frequently
split their talent in Europe between centres such as Frankfurt, Paris and Madrid. Their
decision-making in locating and growing teams is being influenced by Brexit.”
However, the direct economic impact on most EU members is predicted to be small,
according to the Economist Intelligence Unit Global Forecasting Service. In addition, app
company executives at start-ups and enterprises alike don’t put a high priority on
government support when making decisions about where to locate their businesses.
Top 5 location-based factors in growing app businesses
Start-up executives in Europe Enterprise executives in Europe
1. Little competition 1. Vibrant tech ecosystem
2. Broadband connectivity 2. Availability of talent
3. Availability of talent 3. Investment opportunities
4. Quality of life 4. Market size
5. Cost of living 5. Quality of life