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Analyst: Brexit Could Delay IT Investment

Related: Trump Calls Brexit Brave and Brilliant Vote

Tim Jennings—chief research officer, enterprise IT management, for research firm Ovum—says he thinks the U.K. vote to exit the European Union, and the uncertainty about the process, could postpone IT projects until the dust settles, which means at least the couple of years it will take to unwind from the EU.

He points out that IT suppliers have been in favor of the U.K. remaining in the EU, partly due to their own business implications but also for data protection for their customers.

"The U.K.'s momentous decision to Brexit, and the consequential uncertainty of the withdrawal process under Article 50 of the Lisbon Treaty, is likely to have a short- and medium-term impact on enterprise IT investment in the U.K.," he said.

"Senior executives will want to prepare their core systems for any implications of revised trading and legislative agreements," he added, "and may postpone investment in nonmandatory IT projects such as digital transformation until the needs of the business-as-usual environment become clearer."

But Ovum regulatory analyst Luca Schiavoni did not see a major impact on the regulatory environment, given that the U.K. will probably remain part of the European Economic Area.

"The European approach to regulation actually borrows a great deal from the U.K.’s experience of privatization and market liberalization," said Schiavoni. "It is unlikely that the U.K. will adopt a radically different regulatory approach, which will still be characterized by regular market reviews."

However, one aspect that could change is the frequency of such reviews, which is currently set at three years for all markets warranting regulation.

Another possible impact could be losing the mobile "roam at home" benefits of the EU, since mobile broadband would no longer be subject to those free range roaming requirements.

International law firm Bird & Bird saw an issue with the U.K. exiting the European Digital Single Market. "The drive behind the single digital market was to promote common data protection laws, provide better access to products and services at reduced costs across the market, and generally increase adoption and acceptance of digital services," it said Friday. "However, a Brexit would present a real risk that UK companies could be shut out of the European Digital Single Market and consumers and technology companies would not get access to the potential benefits of this project."

It also saw the possibility of communications firms based outside the U.K. to relocate to EU member states.

The British Pound was taking a pounding (a 30-year low at press time), which will benefit those importing from the U.K. but not those importing to it. It could also be a time to deal for U.K. businesses.

On the regulatory side, Bird & Bird points out that EU laws have been incorporated into U.K. law, so it could not be immediately disentangled, though longer term there could be some new territorial restrictions added to EU competition rules—the "Britain First" sentiment drove the EU exit.

And the U.K. would no longer be part of data protection agreements; it could make it unattractive for data centers holding personal information.

(Photo via's Flickr. Image taken on June, 24, 2015 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.