England's Brexit Vote Will Ripple Through the EU Tech Market
The outlook for the European tech market already was being hindered before the Brexit vote, according to the analysts. The regional economy already was sputtering, the U.S. dollar remained strong and the rising political populism—of which the Brexit vote was an example—threatened unity and growth in the economy. "The Syrian refugee crisis and the terrorist attacks in Paris and Brussels have caused a surge in anti-immigrant populist parties, with rising threats to the flow of goods, services, and people within the EU that has underpinned its growth over the past five decades," they wrote. "Faced with the prospect that business operations outside their home country could be hampered, European CEOs turned cautious in their investment plans even before Brexit." Throughout Europe, most tech categories will see little or no growth over the next two years. In 2016, software and tech consulting services will see growth of 1.5 percent and 1.4 percent, respectively, though computer and communications equipment, outsourcing and telecommunications services will all see declines. Next year, software spending will be up by 2.3 percent, and computer equipment, outsourcing and consulting will all increase. Spending on communications equipment and telco services will continue to decline. Software-as-a-service (SaaS) and cloud platform services also will see growth, they said. SaaS subscription revenues for applications will grow 31 percent this year and 23 percent in 2017.However, two events that could aggravate the situation would be a banking crisis hitting Italy or if voters in France and the Netherlands elect nationalistic, anti-EU governments next year.
Forrester analysts listed four possibilities that could change their views on the European tech market. Two would be positive: England changes its mind on Brexit (which is unlikely at this point) and whether German officials boost their economy by moving away from economic austerity measures.