European tech trends: Challenges as Brexit uncertainty continues into 2020

Challenges for European IT firms loom in the shape of economic headwinds, political uncertainty and… yes, Brexit.

2019 was supposed to be the year when Brexit wrought havoc on the IT sectors in the EU and Britain, laying waste to jobs and - depending on your chosen viewpoint - either boosting or severely restricting the scale of startups in London, as well as in other hubs from Berlin to Lisbon.

Brexit didn't happen but it will in 2020. Or might, anyway. Depending on the result of the UK general election, Brexit may be hastened through early in 2020 (seeing it happen before the end of 2019 seems optimistic, to put it mildly) or pushed back even further as politicians continue to wrangle over what 'leave' really means.

Uncertainty is bad for business - any business. Technology firms in the UK aren't isolated from the storm. They depend on companies around the world, especially in Europe, for resources, intellectual property, partnerships, markets and more. The same is true for European technology companies with UK partners or markets. It's hard to do business in another country whilst constantly bearing in mind the distinct possibility that trade barriers may be put in place to make such trade considerably harder in the near future. Strategic planning becomes all but impossible.

Then there's the employment angle. Technology startups tend to employ young, dynamic and mobile people. Take away the 'mobile' part of that equation and the international exchange of ideas and processes may also be taken away. Regardless of what actually happens if/when Brexit is implemented, the fear of what might come is causing technology firms to be wisely cautious about how and where they deploy their resources. All of this will weigh heavily on the IT industry in 2020.

Unfortunately that's not the only obstacle ahead. Germany, Europe's economic and political powerhouse, has been faltering in 2019 in both areas, flirting with recession and finding itself increasingly hamstrung by a failing and flailing coalition government. France is little better, with the Gilets Jaunes protests now more than a year old and the underlying resentment at economic disparity between rich and poor showing no signs of going away. Spain has issues, Italy has problems and the Dutch are increasingly disgruntled. None of this is directly catastrophic for IT firms but none of it helps, either.

One of the main reasons behind European socio-political unrest is the economic situation. Despite proclamations of GDP growth, many people across Europe feel consistently worse off. This has an effect on their spending patterns. One way or another, European technology firms depend on the consumer to fund them, either directly through product/service purchases or indirectly through the sales activities of partner/client companies. That tap isn't going to be turned off but the rate of flow is already falling and will continue to do so.

This is the point at which governments could and should make a difference, by stepping in to promote useful public projects that add value to society. In the old days that meant railways, roads, airports, hospitals and suchlike. Today it's more likely to be internet infrastructure and public-oriented technology projects designed to stimulate the economy whilst also helping people. Few European governments have yet shifted in this direction, although the right noises are being made by Germany and the UK.

To continue reading this article register now