A select committee has urged the Government to formulate an immediate plan for protecting the digital economy following Brexit.
Britain voted to leave the European Union a month ago, which will lead to the withdrawal of EU subsidies and potentially limit access to the Digital Single Market, harming trade.
Many tech firms also rely on European workers due to the worldwide skills gap.
A House of Commons business, innovation and skills select committee said many of the factors which led to Britain becoming a world leader in tech could disappear.
“The government must outline what measures it is taking in the immediate future to support policies connected with the digital economy, in the light of the referendum on the UK’s membership of the European Union, and must ensure that the country’s digital economy remains successful and innovative,” the report said.
“The government needs to state how tech firms that employ EU nationals will be affected in the short, medium and long term.
“The government needs to provide clarity surrounding skills, post-referendum, otherwise skills and talent will be lost to other countries.
“The UK is one of the prime destinations in Europe to set up a tech business. The gaming industry making a larger contribution to the economy that is not picked up because of the way in which the gaming industry is measured.
“The UK is a world leader in fintech, with the sector estimated to be worth £20bn in annual revenues. This position could now be at risk as firms will want to be part of the single market of financial regulation.
“The government needs to set out with urgency how it will address this, to avoid our strengths in fintech being eroded.
“We could have led on the Digital Single Market, but instead we will be having to follow.
“The government must address this situation, to stop investor confidence further draining away, with firms relocating into other countries in Europe to take advantage of the Digital Single Market.”
The government’s digital economy strategy was due to be published earlier this year but was delayed by the referendum outcome.
It is now due to be published later this year as Whitehall departments work out the implications of Brexit.
“We look forward to the publication of the government’s Digital Strategy in the summer of 2016 (six months later than expected), which should explain how the government will build on its success,” the report said.
“We regret this delay, and call on the government to explain the reasons for it.
“We hope the digital strategy will provide an overview of present and future government policy on the digital economy, which will be published as soon as possible, and the government must provide us with an update of any changes made to the strategy since it was originally written.
“The government must also explain how the Digital Strategy will be affected by the referendum result. It should also set out in its reply, and in the Digital Strategy, a list of specific, current EU negotiations relating to the digital economy.”
Popular digital minister Ed Vaizey was replaced by Cabinet Office minister Matt Hancock as part of new Prime Minister Theresa May’s reshuffle last week.