UK tech spending in 2020 will be hit harder than in France or Germany with little prospect of growth next year – analysts

That's what a sluggish pandemic response and 'world-beating' testing programme gets you

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The UK is to see technology spending fall by 9.3 per cent in 2020 followed by a more modest 1.1 per cent decline in 2021, according to research by Forrester.

The analyst firm has also compared France, Germany and the UK's likely tech spending scenarios in light of how these nations are managing the pandemic and stabilising their economies as well as their pre-existing financial and political conditions.

The UK came out worst.

"The UK is more vulnerable because of the country's delayed pandemic response, its problematic testing program, and its narrower income support packages," the research said.

France is predicted to shoulder a less severe drop in tech spending than the UK this year at 6.6 per cent, while at the same time is likely to have the best recovery with 6.3 per cent growth in 2021. Germany is on track for a 5.2 per cent drop in tech spending in 2020 with growth of 4.1 per cent next year, assuming that its economy starts to rouse in Q3 or Q4 2020, Forrester said.

Germany's recovery would be helped by its extensive COVID-19 testing, strengthened employment support programmes, and robust business balance sheets pre-COVID-19, the analyst firm added.

Though some companies have been devastated by the pandemic and others are doing well, it is those in the middle that are likely to have the most interesting IT investment strategies, said Duncan Jones, veep and principal analyst with Forrester.

"The smart ones are investing in differentiation, preparing themselves for a more competitive market going forward. They are saying customer experience, improving products and being better able to react to changes in the market will be a priority."

Though customer-facing and supply chain technologies may get a boost, core software such as ERP and finance may see upgrades and projects delayed. Hardware spending is also likely to be hit hard, while cloud and software-as-a-service would increase, according to Jones.

Large software vendors have been more lenient towards companies struggling for cash as the global recession took hold. Earlier in the pandemic, they were reassuring investors that they were protected by contracts, but Jones said they were now offering more breathing space to customers as they eye longer-term opportunities.

"The attitude is softer: the initial reaction of denial has given way and vendors are realising they need to be more flexible and help customers, but they think there's an opportunity for them to expand their footprint as well," he said.

Where user organisations were looking consolidate on a single supplier to make savings, vendors might want curry favour to ensure they were in the frame, he added. ®

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