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Three post-Brexit scenarios, according to IDC

No one really knows what will happen now that the UK has voted to leave the European Union, and the uncertainty is resulting in pretty high levels of anxiety all around.

Market intelligence company IDC is trying to do its part and make educated guesses, so it has forecast three possible scenarios.

Most probable one (70 per cent) is called the ‘Challenging Transition’ and the positives are that the UK IT market should reach pre-Brexit levels by 2020. Before that happens, though, there will be a slight drop in IT spend during 2017 and 2018, with the IT forecast revised downwards by more than two per cent on a compound annual growth rate basis.

As the same time, West European IT spend will mostly stay unaltered.

The ‘Disruptive Transition’, a 20 per cent chance scenario, is described by IDC as the ‘most pessimistic’ one. With much more pressure, and multiple referenda, IT forecast could be revised downwards by almost five per cent, and would struggle to reach pre-Brexit levels by 2020.

The least likely scenario, the ‘Swift Transition’ (10 per cent) is also the best one. In it, an orderly Brexit process would avoid short-term turmoil and would drive UK economic growth in the medium term.

"Given the uncertainty in the market, we believe the framework that we have put in place will help companies work through the next few months for their short-term business planning purposes," said Philip Carter, Chief Analyst IDC Europe.

"This involves three scenarios with concrete assumptions linked to GDP growth, skills access, regulation/tariffs, exchange rates, infrastructure, market confidence and obviously IT spend. We are also assuming that 2Q and 3Q IT spend in 2016 was, and will be, adversely affected by the uncertainty directly before and shortly after the poll."

Image source: Shutterstock/Alterov