With Britain still counting the ramifications of its shock decision to quit the European Union (EU), spending in the nation's information technology sector is expected to receive a blow as companies reassess their businesses amid volatile market conditions.
Research firm Canalys expects 2016 I.T. spending in the U.K. to drop as much as 10 percent due to uncertainty surrounding the future of Britain's trading relationship with the EU.
Canalys previously estimated I.T. spending in the U.K. to be in the range of $90 billion to $100 billion for the year, on the assumption the nation would remain part of the trading bloc.
"The outlook for 2017 could be even worse, with up to a 15 percent decline as I.T. budgets are set lower on the prediction of a tough year ahead and ongoing uncertainty," said Matthew Ball, principal analyst at Canalys.
On Sunday, economists at Goldman Sachs wrote in a report the U.K. is likely to enter a "mild recession" by early 2017, with gross domestic product expected to take a 2.75 percentage-point hit in the next 18 months.
The most pronounced impact of the Brexit vote was on the British pound, which tumbled to a 31-year low on Monday, extending losses to nearly 12 percent from levels before the results were announced Friday.
A weaker pound will be a key issue for the U.K.'s I.T. sector, with technology prices rising due to higher import costs, according to Ball.