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The only certainty of Brexit is uncertainty

The reality of what Brexit means is starting to sink in: no one knows for certain what will happen.

Six weeks after the UK voted to leave the EU, the weak pound is already causing IT costs to rise and major IT investments are being put on hold.

A recent study from TechUK found that the UK tech sector’s confidence in its potential for growth over the next two years has fallen by 23 points to 70%, down from 93% in March this year. The survey also shows that tech companies are less confident about investing in the UK post-Brexit.

In this week’s issue, we look at how Asian investors are pulling out of datacentre investments. According to datacentre analyst Broadgroup, investors from that region have been quite spooked by the Brexit vote.

The challenge for the UK is not only a question of where else in Europe these investors could go, but as Broadgroup managing director Steve Wallage warns, they could choose to take their money to the Middle East, Africa or India.
Emma Fryer, associate director at TechUK, told Computer Weekly: “What is worrying me is that investors are saying they cannot view the UK as a place to invest, and I don’t want to see that prolonged.”

US and Asian IT firms have previously regarded the UK as the obvious location for their European headquarters, but according to the experts Computer Weekly has spoken to, post-Brexit, it will not make much sense for many of them to base their European investment plans in the UK. Rather, their UK arm will have its own, separate strategy.

London is the centre of the datacentre industry, thanks to the City’s status as a financial powerhouse in Europe. But lack of electricity supply in the capital, combined with high running costs and now Brexit, means some datacentres operating in the financial sector could choose to relocate.

The fourth calendar quarter traditionally sees a big push in the IT industry to capture whatever funds remain in CIOs’ annual IT budgets. But with the continued weakness of sterling against the US dollar, many will be assessing how best to spend what little remains in the fourth quarter and how to get the best value for their money.

Brexit looks set to influence IT strategy and investments for the rest of this year and well into 2017.

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