The European Tech Market Will Slow In 2020 After A Decent 2019
European tech markets will experience slowing growth in 2020, according to Forrester’s latest forecast for the European tech market as a whole and for tech markets in the eight largest countries (“European Tech Market Outlook For 2019 To 2020” and “European Tech Market Outlook By Country For 2019 To 2020”). European business and government purchases of tech goods, software, and services will decline by 0.3% in 2020, with decreases in tech buying in Italy and the UK offsetting very slow growth in France, Germany, the Netherlands, Spain, Sweden, and Switzerland.
The European tech market slowdown in 2020 is a shift down from decent growth in 2018 and 2019. In 2018, the European tech market grew by 3.5% from 2017, outpacing our Q3 2018 projection of 2.9%. Based on data through Q1 and Q2 of 2019, we project that European tech markets in 2019 will have a similar growth rate of 3.7%. That forecast is a decided improvement from our original prediction a year ago of 0.8% growth in 2019. However, the main reason for that better performance is the delay in the timing of Brexit, the UK’s withdrawal from the European Union, which was postponed from the end of March 2019 to the end of October.
With Brexit now likely either this month or by the end of January 2020, UK economic growth and thus UK tech market growth will turn down in 2020. A no-deal Brexit will make the downturn even worse. Meanwhile, Germany and other European countries are feeling the side effects of the US/China trade war and political uncertainties in France, Italy, and Spain, and their slowing economic growth will weaken tech market growth in 2020 in most European countries.
Despite the forecast for a pullback in tech market spending in 2020, there are a few bright spots amid the uncertainty and economic struggles. Software and tech consulting will see solid growth rates in 2019 and 2020. The Nordic region will continue to show the strongest tech growth in Europe, led predominantly by Sweden’s still growing economy and its openness to emerging technologies. French and Dutch tech markets will also do relatively well compared to the German, Italian, Spanish, and Swiss tech markets.