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IT impact of Britain's EU exit likely to be mildly negative, says IDC

sailing away

via Flickr © OliBac (CC BY 2.0)

  • If Britain leaves the European Union..
  • IDC says impact on UK IT industry will be mildly negative
  • Impact on European IT as a whole?  Neutral

Our readers beyond the UK might be vaguely aware that we’re currently convulsing over the issue of so-called Brexit - the possibility that ‘BR’itain might ‘EXIT’ the EU following a referendum on its continued membership. That referendum is to be held on Thursday 23 June 2016 and, as that’s just over two months away, the argument is hotting up and narrowing down.

In particular, over the past two weeks the ‘remain in the EU’ (Remain) side has naturally decided to focus on the economic impact of leaving and has enlisted a procession of bodies and individuals to come up with assessments of how particular verticals (private and public) would be affected should a withdrawal happen. Since each of these ‘reveals’ inevitably tabulates a Brexit cost - be it interest rate rises, trade reductions, research funding cuts and so on, it has infuriated  the ‘Leavers’ and cheered the ‘Remainers’. And the sheer volume of economic minuses must be having an effect on the voters too: after all, it was Bill Clinton who swept to office in 1992 assisted by the slogan ‘It’s the economy stupid’. It always is.

If Brexit happens it won’t just affect the UK - the knock-on (as European politicians are aware) could be profound if the current internal market free trade arrangements are stoppered with tariffs - even small ones.

So how might a ‘Brexit’ affect the British and European IT sectors?

According to IDC, which has been running its spreadsheets over the question, the impact of Brexit  would be mildly negative for IT spend in the UK but neutral for the rest of the European Union.

IDC Europe says it's polled its analysts and come to the conclusion that while Brexit would  “impact UK IT spend, the effect will not be dramatic because [it’s] governed by multiple factors which include demand drivers (such as the transition to 3rd Platform technologies) that are relatively independent of the local economic cycle," says Philip Carter, Chief Analyst for IDC Europe. (3rd Platform technologies include cloud, mobile, analytics and social media technologies).

"Many organizations are also locked into multi-year software licensing agreements and outsourcing deals that would be unlikely to be cancelled or radically restructured in the short term as a result of a Brexit," says Douglas Hayward, Associate Vice President at IDC's European Services team. "Much of the Europe-wide impact will only be determined in the longer run, depending on the renegotiation of EU directives and legislation, and cannot be fully predicted at present."

"Among vertical markets, financial services, manufacturing, and retail and wholesale would be the industries whose IT spend could be more negatively affected by a Brexit decision," according Andrea Siviero, Senior Research Analyst for the IDC European Industry Solutions team. "Restructuring the financial single market on one side and the impact on the U.K. current account on the other could potentially lead these three industry sectors to struggle if the U.K. exits from the European Union."

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