As soon as the news of the Brexit vote in the UK came out, the Forrester team began revising our UK and European tech market forecast to take into account the economic implications and uncertainties of the voters’decision that the UK should leave the EU. Based on this revised analysis, we predict the UK tech market will grow by just 1% (pounds sterling) in 2016 with zero growth in 2017, compared with our prior forecast of 5% in both years.
Europe as a whole, will post no growth in 2016 (euros), and just 1% growth in 2017 — two percentage points slower than our earlier forecast. With the plummeting pound and enervated euro, European tech market measured in US dollars will be similarly weak with 0.2% growth in 2016 and 1.1% in 2017.
The slowing of UK and European tech market growth results from multiple uncertainties created by the Brexit vote coming on top of what was already a weak and shaky European economy. As a result:
The UK economy, which had been outperforming most of the Eurozone countries, will take a hit. The Belgian, Dutch, French, German, Italian, and Swiss economies, which are growing by 1-1/2% or less, are vulnerable to declines, with Italy especially exposed due to a looming banking crisis.
Greece and Portugal are struggling once again, with threats of renewed recessions leading to declines in tech spending.
The only countries with decent economic growth and above average tech market growth are Ireland and Spain in the Eurozone, and Sweden, Poland, and other Central European countries outside it.