Brexit – bad for the UK’s ITC market, says ITCandor survey

The survey shows that it would be better for the success of the ITC market if the UK remains part of the EU. If it leaves:

• You should lower your expectations for ITC spending in the UK, but not for the remaining EU markets,
• Those suppliers currently receiving subsidies from the EU will lose out,
• The UK government will collect more tax from multi-national suppliers, and
• The UK will have (even) closer ties to the US suppliers.

As you will read I believe things will be worse than that.

I don’t think my survey is going to challenge MORI – the 16 responses make it look more like the depth of one carried out for a cat food or cosmetics advert. However they do illuminate the challenges the IT and communications (ITC) market would be under if the UK decides to leave the EU in its referendum on June 23rd 2016.

The Figure above shows what our sample thinks will happen to market growth rates if the UK exits: 50%  expect UK spending to decline more than their current expectations compared with just 13% for the remaining EU countries; 80% of respondents expect their current growth expectations will stay the same for the rest of the EU if the UK leaves compared with 44% for the UK. Few of the sample (6% for the UK, 7% for the rest of the EU) expect spending on ITC to grow if the UK exits. The survey shows that the sample expects a poorer ITC market in the UK with little effect on the remaining countries.
What are the main issues for the ITC industry and spending if the UK leaves the EU? I allowed multiple choice answers for this question. The withdrawal of EU subsidies for gaming developers and others was cited as an issue by 63% of the sample, making it the most important effect of those I prompted them with.

Half of the sample expect the UK to have closer ties with the US as a result of leaving (a view Barack Obama doesn’t appear to share – at least in the interference he’s been making in the debate up until now).

44% of respondents expect there to be skills shortages as the result of an exit – my view is that there are certain areas of the ITC industry which would require exemption form an immigration point of view (network security experts for instance); however such legislation might take a long time, given that a decision to leave would be seen as a victory for those with strong anti-immigration policies.

38% of respondents expect the UK government will collect more tax from multi-national suppliers as a result of leaving the EU – a view I’m cynical about given the reluctance of any recent UK government to use the legislation it already has to maximise these tax revenues.

Hardly anyone (6%) expect the UK to develop closer ties with its Commonwealth countries as a result of leaving. A EU-independent UK looks unlikely therefore to win over the old Empire as a trading bloc.

The sample itself was mainly from people living in the UK (63%), with a quarter living in the EU outside the UK. There were also a couple of respondents from the Americas and Asia Pacific. In terms of roles the sample was split between IT and communications suppliers and users (38% each), with 25% ‘Others’. I should have expected it.. most of the others were analysts of course.

Thanks to all who took part – let me know if you have any questions.