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Brexit: UK tech spend flattens as France and Germany pull away

CIOs in the UK look set to fall behind their French and German counterparts, as Brexit hits tech spending

Analyst Forrester has forecast that purchases of tech goods and services will grow globally by 4.5% in 2019 and 3.8% in 2020, compared with 5% in 2018. However, the UK IT market is likely to decline by 0.5% in 2019, it said.

Technology spending will largely be influenced by the global economic climate. “Our forecast for the global tech market in 2019 and 2020 is very shaky, with several risk factors threatening weaker growth than our current forecast, the analyst firm warned in The global tech market outlook for 2019 to 2020 report.

UK CIOs are set for a rough ride if the UK leaves the European Union (EU) on 29 March without a trade deal. The growing prospects of a “hard” Brexit will slam the UK and its neighbours’ economies, Forrester warned. It forecast that the UK’s technology market would slow by 0.6% in 2019 and 0.5% in 2020.

In the report, Forrester principal analyst Andrew Bartells predicted the UK’s economy would head into a recession in 2019, as prime minister Theresa May’s proposal for a negotiated exit from the EU faces opposition from major parts of her own party, as well as Labour and other opposition parties.

“The prospect of a no-deal Brexit now looms larger, with devastating impacts on the UK economy, and lesser but still real damage to Ireland, the Netherlands and its other European trading partners,” Bartells wrote.

Bartells warned that Parliament’s rejection of the agreement between the EU and Theresa May’s cabinet defining the terms of an EU/UK relationship after March 2020 reduces the prospects for a negotiated Brexit that preserves most existing trading relationships.

In Forrester’s analysis of the 25 largest markets for purchased tech goods and services in 2019 and 2020, the UK is forecast to come bottom equal with Italy for IT spending in IT 2019.

Italy is expected to experience a continued decline in spending through 2020 (-0.2%), while Forrester has forecast a slight increase in the UK’s IT spending (0.6%). This means that over 2019-2020, the UK’s spending on technology is likely to remain more-or-less flat at 0.1% growth.  India, which Forrester identified as the biggest tech spender, is expected to grow its IT spending by 14.3% in 2019-2020.

For the same period, IT spending in France is expected to grow by 3.3%, while in Germany IT spending is forecast to grow by 1.9%, according to Forrester.

The figures suggest that German CIOs will be spending almost 20 times more than CIOs in UK organisations, while French CIOs are likely to be spending 33 times as much as compared with their UK counterparts.

Read more about Brexit’s impact on IT

  • Trade body TechUK is concerned smaller companies are far from ready for a no-deal Brexit scenario, while warning that leaving the EU without a deal could lead to serious data issues for businesses.
  • No-deal Brexit: Skills, funding and the free flow of data are all at risk, says BCS, the chartered institute for IT.

Read more on CW500 and IT leadership skills

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