STAMFORD, CT – The UK vote to leave the European Union will affect IT costs in the short term, but staffing may be the No. 1 priority for UK firms, with other effects emerging over the two-year negotiation period that will follow, says Gartner.

On June 23, the UK voted in a referendum to leave the European Union. The UK government is now expected to activate the EU’s Article 50, thereby starting the two-year period in which Britain will negotiate its exit.

For EU CIOs, staff may be the largest immediate issue, says the research firm. There will likely be no short-term change to free movement of staff between the EU and the UK, but restrictions and border controls will likely be reintroduced at the point of final UK exit from the EU, if not before.

Staff working away from their home country may react impulsively to “Brexit,” says Gartner. The long-term uncertainty in work status will make the UK less attractive to new foreign workers.

Businesses will want to reassess where they are located, where they need to be in future, and where they buy from. Many businesses will review how they operate and buy services.

Gartner expects the pound to remain low for much longer, making dollar-denominated IT products and services in the UK more expensive as vendors raise prices to cover costs and protect margins. UK vendors may gain a cost advantage and be able to price more competitively.

Consumer discretionary IT spending in the UK and most of Western Europe will remain slow until the first half of 2017, says Gartner. The firm expects UK and European businesses to put discretionary IT spending on hold until the vote. Many long-term projects will be put on hold and likely not restarted until 2017.

The current Gartner worldwide IT spending forecast assumed the UK would not exit the EU. With the UK’s exit, there will likely be an erosion in business confidence and price increases that will impact the UK, Western Europe and worldwide IT spending, says the firm.

Gartner’s latest forecast for constant currency growth for 2016 and 2017 UK IT spending is 1.7% and 2%, respectively. Brexit will lower the 2016 figure by two to five percentage points.

The UK's 2017 IT spending growth will be negative as well. Similarly, Western Europe’s timid 0.2% growth in 2016 will turn negative. Worldwide IT spending growth, currently forecast at 1.5%, will remain above 1.2%.

Gartner recommends maintaining current practices and strategies; anticipating customer concerns on issues such as data protection, data location, support and privacy; creating an “Office of Brexit” to watch for impacts of any legislative changes and provide influence where possible; assessing the impact of pound and euro currency movements on product and service costs; and identifying and supporting staff who may be impacted by long-term changes.

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