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After 7% growth in 2015, European tech spending will remain flat at €707-billion this year and grow by just 0.8% next year, according to Forrester’s midyear forecast.
Business and political uncertainties after the decision by UK citizens to leave the European Union (Brexit) on top of already slow economic growth have led Forrester to reduce its original projection for EU tech market growth for 2016 and 2017 by about 2%.
At a country level, UK tech spending will see the sharpest slowdown, growing by just 1,3% in pounds in 2016, with no growth in 2017 – representing a drop of 4,2% and 5,3%, respectively, compared with Forrester’s pre-Brexit forecast.
The exceptions will be countries outside the Eurozone, with the Central European countries, like Poland, the Czech Republic, and Hungary, and Nordic countries, like Sweden, seeing tech spending growth of around 5%.
Other key findings from Forrester’s European tech market outlook for 2016 and 2017 include:
* The biggest downward swing in UK tech investment will be in financial services, followed by retail and manufacturing, especially in the automotive industry. UK’s public sector, as well as utilities, telecoms, and professional services will not be immediately affected by Brexit.
* Software and tech consulting services will again have the best growth in 2016, at 1,5% and 1,4%, respectively. Computer equipment will decline by 3,3%, with communications equipment down by 1,5%. Tech outsourcing and telecom services will be in between, with 1,2% and 0,8% decreases, respectively.
* Business technology (BT) purchases to win, serve, and retain customers will continue to grow faster than traditional IT spending, but not by as much. While in 2014 and 2015, BT spending increased by 9% and 13% – several times more than 2% and 5% for IT – BT growth in 2016 will be 2,7%, compared with a 1,3% decline in IT purchases.