After 7 percent growth in 2015, European technology spending will remain flat at €707 billion this year and grow by just 0.8 percent next year, according to the Forrester Research 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 percent.
At a country level, UK tech spending will see the sharpest slowdown, growing by just 1.3 percent in pounds in 2016, with no growth in 2017 -- representing a drop of 4.2 percent and 5.3 percent, respectively, compared with Forrester’s pre-Brexit forecast.
The exceptions will be countries outside the Eurozone, with the Central European countries -- such as Poland, the Czech Republic, and Hungary -- and Nordic countries -- such as Sweden -- seeing technology sector spending growth of around 5 percent.
Other findings from the market study 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 percent and 1.4 percent, respectively.
- Computer equipment will decline by 3.3 percent, with communications equipment down by 1.5 percent.
- Tech outsourcing and telecom services will be in between, with 1.2 percent and 0.8 percent decreases, respectively.
- Business technology (BT) purchases to win, serve, and retain customers will continue to grow faster than traditional information technology (IT) spending, but not by as much.
- While in 2014 and 2015, BT spending increased by 9 percent and 13 percent -- several times more than 2 percent and 5 percent for IT -- BT growth in 2016 will be 2.7 percent, compared with a 1.3 percent decline in IT purchases.