BREXIT Crystal ball strokers at Gartner have calculated Brexit will wipe $4.6bn off the value of tech spending in the UK this year, and the resulting Sterling currency volatility will force US vendors to hike prices.
Gartner hit the emergency button this morning following the vote, and re-forecast earlier projections from 1.7 per cent growth to $179.6bn to a potential drop between 0.3 to three per cent.
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Gartner previously anticipated spending growth of two per cent to $183.1bn for next year but was busy updating this in light of Brexit, with chief forecaster John Lovelock indicating it would also be a decline now.
“We’re still working on those,” he confirmed, “until last night we had this as a contingency but didn’t expect Brexit to happen,”
Tech vendors we contacted this morning for comment all said pretty much the same thing and were caught on the hop by EU referendum.
This is a big deal for the IT industry - the UK market represents 26.5 of total western European IT spending and 5.26 per cent of that globally.
The reason for that drop in IT spend? Uncertainty, as buyers await the outcome of withdrawal from Europe, a possible general election and yet more referenda.
Distributors told us this morning some that some vendors had suspended order due to the uncertainty of the market, with issues including currency, and other suppliers talked of the short-term impact of Brexit.
Lovelock singled out discretionary spending as the items that would get hit first – phones, tablets and PCs – which is bad news for perennially knackered PC makers.
Also frozen will be spending on big IT projects for infrastructure equipment such as servers, storage and networking. Lovelock predicted:
Small price rises occurred in Blighty in 2015 but the pound has since shown some recovery, and Gartner had earlier expected it to reach levels last recorded against the US dollar in 2014.
Now, however, Gartner doesn’t know when the pound will recover and reckons US vendors will give up on swallowing the cost of manufacturing to raise prices in the UK to make up the difference.
“The real street price people pay will go up,” Lovelock said. “This is a simple reality of the market.” He didn’t quantify the price increase. ®