Why Do 57% Of UK Founders Say The EU Is Better For Growth Than Britain

Research conducted by e-Residency highlights significant trends in the startup ecosystem. According to the study, 90% of founders would establish a business in Britain again; however, 57% assert that post-Brexit barriers make the EU more attractive for expansion. Additionally, 77% maintain a positive outlook on the UK's position over the next three years, although many perceive faster progress in other regions.

The study identifies streamlined systems abroad as a contributing factor. It reports that 55% of respondents perceive digital-first registration in other markets as advantageous, and 50% find foreign talent programs more accessible, facilitating quicker operations.

Europe remains a preferred region for expansion with 74% of respondents selecting it, citing easier procedures and supportive market conditions for early growth.

Digital trust has become integral to business decisions. e-Residency's research indicates that 88% believe it determines startup success. Furthermore, 85% equate digital infrastructure with physical networks for maintaining operational stability, and 84% consider trust as significant as product quality or price in customer decision-making.

The study reveals that 73% of founders encountered online risks or misinformation in the past year, with 26% experiencing sector-specific harm from AI-generated fakes or false profiles.

Founders now allocate approximately 16% of their operational budgets to digital trust, verification, and security, which is seen as essential for maintaining credibility in a competitive market.

Governments are increasingly involved, with 84% of respondents calling for stronger measures on digital resilience, and 78% warning that companies neglecting trust may lose critical market access.

The study indicates growing pressures within UK companies, with 89% reporting skills shortages, and 29% experiencing significant impacts over the past year. AI and data science shortages affect 79% of respondents, while cybersecurity shortages impact 80%.

Personal wellbeing is also affected, as 95% of founders report impacts on personal wellbeing, with 44% frequently facing stress or burnout. Furthermore, 37% encounter financial insecurity linked to business survival, and 34% struggle to balance family and professional responsibilities.

Mentorship gaps are another issue, with 18% of respondents feeling isolated due to a lack of senior guidance, which could facilitate faster growth.

British founders anticipate a shift towards AI-first businesses by 2030, with 75% predicting this trend. Additionally, 70% fear that companies ignoring AI may fall behind within five years. Currently, 76% already utilize AI for product development, and 71% report new revenue streams or markets enabled by AI.

The research suggests that growth is becoming increasingly borderless, with 74% expecting companies designed for global operations from inception to become the norm. Digital ecosystems are anticipated to play a more significant role in expansion compared to physical hubs.

Uncertain regulation is seen as a barrier to cross-border expansion, with 70% of respondents expressing concerns. Over half (51%) seek faster and clearer regulatory guidelines for AI and digital identity, while 42% advocate for greater investment in digital infrastructure and R&D, and 39% call for enhanced standards for cybersecurity and digital resilience.

Liina Vahtras, Managing Director at e-Residency, emphasized the need for predictable systems, stating, "Digital trust has become the passport for global business, and founders will cross borders in whichever direction offers certainty and speed. UK entrepreneurs are loyal – they want to build here – but they’re also realistic about where digital systems make their lives easier."

She further noted, "e-Residency is proof of how powerful that can be. When a founder can create and run a company remotely, with trusted digital identity and seamless compliance, it frees them to focus on growth instead of bureaucracy."

Vahtras concluded by highlighting the significance of government-backed digital infrastructure, with 79% of UK entrepreneurs indicating it will determine international scaling by 2030. The path forward is clear: trust, predictability, and digital-first processes are foundational to global competitiveness.

Based on reporting by techround.co.uk.