Forrester predicts that, due to the coronavirus and resulting recessions, tech spending in the UK, France, and Germany will decline by 5% to 7% in 2020 from 2019 levels in the most optimistic case. Forrester also forecasts that the UK will be the most vulnerable out of the three countries, with a deeper decline in 2020 and continued, but slightly less negative, declining growth in 2021, while France and Germany are more likely to experience modest recoveries in 2021.
Across all three countries, the impact of the coronavirus on tech spending will vary depending on their approach to managing the pandemic, their economic stabilisation programs, and preexisting economic and political conditions.
Key findings include:
- The UK will be most heavily impacted, with an expected tech decline under the more pessimistic scenario of 9.3% in 2020 and a 1.1% decline in 2021.
- The UK is more vulnerable because of the country's delayed pandemic response, its problematic testing program, and its narrower income support packages.
- The most likely scenario will see computer equipment sales drop by 9%, communications equipment by 11%, and software spending by 10%.
- France will be the second-worst-hit country in 2020, with a 6.6% drop in tech spending under a more optimistic and more probable scenario. The country would have the best recovery, however, with a 6.3% growth in 2021.
- Recovery will likely come sooner in France than in the UK because of its aggressive response to the coronavirus, the financial support its government has provided businesses and professionals, and its strong social safety net and business balance sheets pre-COVID-19.
- The most likely scenario will see tech consulting services drop by 7%, tech outsourcing by 7%, and software and communications equipment by 6%.
- Germany will decline less compared to the UK and France in 2020, with a 5.2% drop in tech spending, and will have a mild rebound of 4.1% in 2021 assuming that its economy starts to revive in Q3 or Q4 2020.
- Germany's recovery will be helped by its extensive COVID-19 testing, strengthened employment support programs, and strong business balance sheets pre-COVID-19.
- The most likely scenario will see computer equipment sales drop by 8%, tech consulting services by 6%, and software by 5%.
"COVID-19 is significantly impacting tech spending and budgets in the UK, France, and Germany, with the UK looking like it will be hit the hardest in 2020 and beyond," said Andrew Bartels, VP and principal analyst at Forrester. "A key factor in how well a country's economy and tech market will bounce back is dependent on how early and aggressively it acted to contain the spread, as well as its economic stabilisation program in place."