Shortages, price rises, recession: Tech industry preps for hard Brexit

Is it Project Fear? Tech trade doesn't seem to think so


Canalys Channels Forum 2018 Product shortages, additional price hikes and a recession could become a reality if the UK crashes out of the European Union without any sort of trade agreement in place. This was the message that came loud and clear at this week's Canalys Channels Forum in Barcelona.

Some people in the industry are getting jittery and it is understandable: the UK is scheduled to exit the European Union on 29 March, but the shape of that departure is still being negotiated by politicians.

Businesses crave predictability but there is no certainty to the outcome of ongoing talks between Britain's Brexit negotiator Dominic Raab and his EU counterpart Michel Barnier.

Tech vendors are putting contingency plans in place for one of three potential outcomes: a hard Brexit if no deal can be agreed; a soft Brexit; or no Brexit at all – the latter appears unlikely.

Self-confessed Europhile Steve Brazier, CEO at analyst Canalys, told Channels Forum 2018 attendees: "Nobody has a clue today what's going to happen and it's only six months away.

sands of time

HMRC rapped as Brexit looms and customs IT release slips again

READ MORE

"There's complete uncertainty and chaos. How any sensible business can plan for something that is so unknown... is extraordinary. The real point is it's so close, and yet we know so little."

If Britain remains in the EU, Brazier predicted, the British pound will rise, tech prices will fall and there would be a short-term boom to the economy – tech sales will feel the benefit.

Should the UK negotiate a deal with the EU, which Brazier claimed was "probably the most likely" scenario, the same dynamics are expected to play out: the local currency will get a boost, tech prices will fall and again the economy will be lifted.

"The third scenario is the so-called hard Brexit where there's no deal, or virtually no deal, in which case there will be all sorts of chaos and disruption," the analyst said.

"Most likely, the UK will fall into a recession, possibly a very deep recession, and most vendors and more importantly distributors will have a lot of work to do.

"We may well end up with a model where the UK has different products to Europe, different codes, different approvals, and we are not allowed to ship them from the UK to Europe or vice versa. And there will certainly be product delays."

Tech distributors will need to establish more warehouses in Britain to hold stock, he said.

"The distributors will have to UK warehousing for all goods and won't be able to swap between countries which means there will be delays in imports, which means there will be product shortages."

The Reg spoke to one senior source at a large reseller who voiced concerns about spare parts.

HP and Dell EMC, for example, hold replacement components in Holland and ship them across Europe, typically in one to two days.

"Warranty spares is where it gets difficult," our source said.

"Replacement keyboards come from Holland to the UK, and the faulty part is sent back to Holland. That is two border crossings. If you keep crossing borders, perhaps you rack up more tax. And if customs become difficult, you have a broken PC for maybe a week."

Many vendors at the forum were reluctant to talk to The Register about Brexit – largely because they have been left in the dark by the governments involved. Some were bold, though, and opened up about their preparations.

EU puzzle piece

London tipped to lead European data market. Yes, despite Brexit!

READ MORE

"We are preparing for the worst – a hard Brexit," said Craig Booth, UK country manager at Acer. "By planning for the worst we can scale back actions that we take depending on the outcome.

"It is reasonable to assume that we'll have to prepare for an immediate to mid-term impact on the currency that will lead to price rises which will then cause the market to contract."

This is speculation based on the potential outcomes, Booth added, and the company is trying to minimise any frustration for customers and those that sell its kit, and of course itself.

Fiona O'Brien, Lenovo's EMEA chief channel officer and head of operations, told us it has a project team that planned for the various Brexit outcomes. "Of course we have to monitor the situation carefully."

When pressed if Brexit was a good idea or not, she said: "Any scenario where a barrier to trade is enforced makes it more difficult to trade, of course. As a company generally we are hoping and speaking out for open trade, so if there is any impact to open trade that would be a concern, but for now it is very hard to call."

Dell's veep of enterprise channels for Europe, Sarah Shields, said Dell had a team working on Brexit since the day after the referendum.

"We are working closely with the UK government and various advisory boards about what the outcome will be – whether it is a hard or soft Brexit."

The last time we looked, the government seems to be none the wiser about the outcome than the rest of the UK, those on continental Europe or anywhere else. ®

Similar topics


Other stories you might like

  • Prisons transcribe private phone calls with inmates using speech-to-text AI

    Plus: A drug designed by machine learning algorithms to treat liver disease reaches human clinical trials and more

    In brief Prisons around the US are installing AI speech-to-text models to automatically transcribe conversations with inmates during their phone calls.

    A series of contracts and emails from eight different states revealed how Verus, an AI application developed by LEO Technologies and based on a speech-to-text system offered by Amazon, was used to eavesdrop on prisoners’ phone calls.

    In a sales pitch, LEO’s CEO James Sexton told officials working for a jail in Cook County, Illinois, that one of its customers in Calhoun County, Alabama, uses the software to protect prisons from getting sued, according to an investigation by the Thomson Reuters Foundation.

    Continue reading
  • Battlefield 2042: Please don't be the death knell of the franchise, please don't be the death knell of the franchise

    Another terrible launch, but DICE is already working on improvements

    The RPG Greetings, traveller, and welcome back to The Register Plays Games, our monthly gaming column. Since the last edition on New World, we hit level cap and the "endgame". Around this time, item duping exploits became rife and every attempt Amazon Games made to fix it just broke something else. The post-level 60 "watermark" system for gear drops is also infuriating and tedious, but not something we were able to address in the column. So bear these things in mind if you were ever tempted. On that note, it's time to look at another newly released shit show – Battlefield 2042.

    I wanted to love Battlefield 2042, I really did. After the bum note of the first-person shooter (FPS) franchise's return to Second World War theatres with Battlefield V (2018), I stupidly assumed the next entry from EA-owned Swedish developer DICE would be a return to form. I was wrong.

    The multiplayer military FPS market is dominated by two forces: Activision's Call of Duty (COD) series and EA's Battlefield. Fans of each franchise are loyal to the point of zealotry with little crossover between player bases. Here's where I stand: COD jumped the shark with Modern Warfare 2 in 2009. It's flip-flopped from WW2 to present-day combat and back again, tried sci-fi, and even the Battle Royale trend with the free-to-play Call of Duty: Warzone (2020), which has been thoroughly ruined by hackers and developer inaction.

    Continue reading
  • American diplomats' iPhones reportedly compromised by NSO Group intrusion software

    Reuters claims nine State Department employees outside the US had their devices hacked

    The Apple iPhones of at least nine US State Department officials were compromised by an unidentified entity using NSO Group's Pegasus spyware, according to a report published Friday by Reuters.

    NSO Group in an email to The Register said it has blocked an unnamed customers' access to its system upon receiving an inquiry about the incident but has yet to confirm whether its software was involved.

    "Once the inquiry was received, and before any investigation under our compliance policy, we have decided to immediately terminate relevant customers’ access to the system, due to the severity of the allegations," an NSO spokesperson told The Register in an email. "To this point, we haven’t received any information nor the phone numbers, nor any indication that NSO’s tools were used in this case."

    Continue reading

Biting the hand that feeds IT © 1998–2021