Carla La Croce (Senior Research Analyst, European Industry Solutions, Customer Insights & Analysis)
Andrea Siviero
Andrea Siviero (Associate Research Director, European Customer Insights & Analysis)

Seizing the opportunity of our IDC European 2018 FutureScape presentation, we recently published an European IT Market Update that looks at the IT Spending Forecast evolution in 2017, focusing on the  British IT Market outlook when a year and a half has passed since the Brexit referendum.

As Brexit negotiations between the British Government and the European Commission move forward, next discussion phases will follow with different agreement options still on the table. This is leading to a strong uncertainty that still characterizes the transition.

Despite this uncertainty, the short-term Brexit impact on the European IT Spending* Forecast resulted to be more moderate than what initially expected, with the European IT Market 2016-2020 CAGR that increased from +2.0%, in June 2016 (Source: IDC Worldwide BlackBook Standard Edition, 2Q16 PreBrexit Version), to +2.9% (Source: IDC Worldwide BlackBook Standard Edition, 3Q17).

The European IT Spending 2016-2020 CAGR boost is driven by the Nordics and France which show the highest CAGRs increase with respect to PreBrexit value, while Germany is now the European country with the highest expected growth for 2018/2017. The British IT Market, although with a slightly higher 2016-2020 CAGR, shows a reduced 2018/2017 growth rate, expected now to be the fourth last growing Western European country for the year ahead.

European Services and Software Market forecast is quite stable when compared with 1H16, a trend confirmed and slightly accentuated in the U.K. market. IDC has not seen any disruptive Brexit impacts on these two markets yet, which are driven by multiyear outsourcing, maintenance, and enhancement contracts.

The Hardware market, on the other hand, drives the overall IT spending forecast change. An increase in the average price of devices, driven by both currency fluctuation and price increase, boosted hardware market growth, despite a unit drop and uncertainty in some subsectors and countries. More specifically, the U.K. experienced the strongest currency fluctuation effect and British demand is underperforming other countries. The hardware market in the U.K. shows weak positive expected growth for the forecast period.

In terms of Industry Sectors’ IT Spending, public sector, finance, and manufacturing are the most exposed British industries to Brexit effects and ongoing negotiations. This is driven by large organizations’ relocation moves and currency fluctuation in the shorter term, and the recruitment gap, new internal rules and relationships with other countries in the longer term. IT Spending Impacts will be more limited for utilities and other industries, such as telecoms/media, transport, professional services, and personal & consumer services.

Considering the Brexit driven uncertainty that will still characterize the European scenario in 2018, IT Providers will have to develop dynamic scenario-based planning assessments, differentiate UK go-to-market by technology category, while benchmarking pricing and foster regular communication updates. On the other side, IT end-users will need to stay close to the action, evolve procurement approaches, and align IT plans with strategic corporate directions.

Discover more about our IDC European IT Market Update in the recently published IDC Market Presentation “IDC European IT Market Update: A deep dive on the U.K., 17 Months after the Brexit Referendum” and don’t hesitate to reach out to get in touch with some of the IDC European experts on the theme.

We would love to hear your comments and look forward to continuing the conversation with you.

*Note: IT spending refers to hardware, software, and services spending, excluding mobile phones and telecom services