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Brexit: UK IT Spending Cuts, Data Center Concerns?

The potential fallout from Brexit — Britain’s decision to exit the European Union — may seriously impact IT spending and data center build outs across the United Kingdom, anecdotal evidence suggests.

Among the latest chatter that VARs and MSPs worldwide should be tracking: IT spending in the UK will be hit hard due to uncertainties and business movements to reduce risk, resulting in a decline of up to 10 percent in 2016 and perhaps even a 15 percent drop in 2017, Canalys predicts.

The big areas of concern include the financial services vertical and data center infrastructure. Multiple banks say they intend to relocate some employees from the UK to neighboring countries in order to leverage European Union agreements and related commerce. Some data center and IT providers may follow suit.

Indeed, some businesses are rethinking whether to build data centers and hosted cloud services in the UK. Infor CEO Charles Phillips, for one, says his company may abandon plans to host more data in the UK for customers. Instead, the company may lean toward managing customer data in EU member countries for the sake of clearer compliance and privacy directives, Phillips told The Wall Street Journal.

Charles Phillips

Charles Phillips

And therein resides the silver lining: While IT spending and data center build-outs could potentially dip a bit — or perhaps even dramatically — in the UK, neighboring countries that are EU members could gain some of that IT spending and associated talent.

Related Coverage:

  1. What Brexit Means to IT Service Providers, Tech Businesses
  2. TechUK CEO Julian David statement on Brexit vote
  3. Brexit Checklist for Business Managers, Executives
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