Issue link: https://cp.revolio.com/i/709701
THE DATA CENTER JOURNAL | 17 www.datacenterjournal.com t he world is pondering the impact of Britain's vote to exit the European Union, including whether it will actually take place, but the stock market responded immediately, to the detriment of that region's data center providers. Share prices for many of the largest European providers, such as Equinix, Digital Realty Trust and Interxion, slumped slightly both the day of and the day aer the an- nouncement of the voting results. Since then, U.S.-based Equinix and Digital Realty Trust have rebounded, whereas Netherlands-based Interxion is slow to return to its numbers from before the announcement. So why is everyone worried? e long-term concern surrounds the potential expenses and compliance burden that pro- viders will incur once the U.K. establishes its own regulations, not to mention the regulations and compliance costs that the remainder of the EU will direct toward the U.K. If and when the U.K. formally exits the European Union, an additional issue is the status of EU citizens who are employ- ees of British companies yet lack British passports. A longer-term concern is that the rising political tensions in the EU will lead other member states or regions inside those states to likewise pursue with- drawal. e economic situation in the EU remains shaky, with negative interest rates indicating fear on the part of central banks and investors. e trend toward political centralization could easily shi toward one of decentralization—not unlike the surprising fall of the Soviet Union, whose economic and ethnic strains led to dissolu- tion of a once feared political giant. Should such an event occur in the EU, even if it does so more gradually, the issues that Brexit raises would be compounded many times over, with the various nations at- tempting to reformulate their relationships with each other as well as navigate a new international regulatory landscape. At the moment, the outcome of the Brexit campaign remains unclear. e British public has voted for the U.K. to withdraw from the union, but that vote does not result in an immediate exit. Calls for yet another referendum could lead to a reversal of the original vote if a counter- campaign garners enough support. Bar- ring the success of such an effort, the U.K. and the EU will negotiate terms of their separation over a two-year period; until then, the U.K. will remain a member. For now, and for most data center companies in Europe, it's business as usual. Demand for data center space is unlikely to change as a result of this decision, espe- cially since any real effects remain on the horizon. Concerns regarding compliance and travel will emerge from the negotia- tions, but those negotiations will likely preserve the freedom of movement that European and British citizens enjoy today. As time passes, will likely ease as citizens and politicians get used to the idea. For now, fears about the potential downsides of a successful Brexit, such as a more complicated landscape for compliance, tariffs and passports, will ease or adjust over time as the situation plays out. But they probably won't change the demand for data center space in the European and U.K. markets. n The Short on BREXIT and the EU/UK Data Center Market By sTaff WriTer