Brexit, Trump & 2017: Attempting to Predict the Coming Year in IT
It has been a pretty turbulent time politically and in the business world in the last 12 months, and it looks set to continue in the same vein. The Brexit vote came and went, and regardless of which way you personally wanted the vote to go, it seems the industry overall wanted to remain.
It has been a pretty turbulent time politically and in the business world in the last 12 months, and it looks set to continue in the same vein. The Brexit vote came and went, and regardless of which way you personally wanted the vote to go, it seems the industry overall wanted to remain. Multiple surveys, interviews with thought leaders, business heads and vox pops show a very clear opinion that the IT industry would have preferred to stay in the EU, in some cases by as much as an 80%+ majority. Brexit has happened though, and it seems unlikely that it will be derailed now.
The biggest impact
Without a doubt, the biggest immediate impact has been the weaker pound to the dollar. Anyone who buys in the IT industry will tell you that the current rate is pushing the price of materials. With many of our material costs being directly linked to the Chinese and other Far East markets that trade in dollars, there always had been a volatility of price linked to the exchange rate. So there is no escaping the bottom line that when the pound is trading at $1.25 compared to a 1.5 high in 2016 we are paying 25¢ more in base costs, and prices must rise accordingly. However, that does not necessarily mean everything is gloomy. Much of the cost of IT is in labour and manpower which, as the economy overall looks set to remain stable, is unlikely to change much. So a rise yes, but one which may have a smaller impact than initially seemed likely.
The other aspect of the IT issue may be that the industry is helping to fill the skills gap with European workers. This was a big factor in the leaning towards remain in amongst industry leaders, we suspect. However, again here we need to remember the circumstances of a skills gap mean that it is unlikely the government will allow industry to suffer. We simply do not produce enough skilled IT people in the UK, so the use of European workers has little impact on employment opportunities for candidates. In a candidate-led market, there is always the next job in the line. Again here, there could well be little immediate change and in the long run smart businesses (and we are IT, so we are sort of in the business of being smart anyway) will be looking to resolve long-term employment issues long before any Brexit impact.
What about EU trade then? Well, this one is slightly more difficult. Of course, a lot of the IT industry is domestic by nature but will leaving the EU result in some of the major IT employers moving out of the UK? The banking and other financial sectors are prolific employers of IT staff, and several have threatened to move out post Brexit. However, remember we are short of IT staff overall, so the chances are someone will simply move in to absorb the workforce if they do.
We are seeing a lot of discussion of post-Brexit Britain in the press at the moment but here, on the front lines, so to speak, we are not post-Brexit. The full effects have not really been felt, and we could well be years away from feeling them. That gives the UK IT industry time to do something that we know from experience it is incredibly good at, adapting and adopting new strategies. While Silicon Valley may lead the world, here in the UK we can hold our own pretty well, and this will probably be our biggest asset in the coming months.
The Trump effect
Talking about Silicon Valley brings us rather neatly to President Trump and his somewhat turbulent first weeks in office. If it is difficult to predict the effect of Brexit, then predicting the Trump effect is hundreds of times worse. At the moment, the Whitehouse is having negligible effects on the UK IT market. However, there is probably no way of knowing if that will continue. The USA has heard some pretty loud voices against Trump from industry heavyweights such as Apple, Facebook, HP and, of course, Microsoft, to name a few. Whether he will, as many suspect, take a swipe back in revenge is yet to be seen.
Interestingly enough, last night, I went to see Mark Carney, Governor of the Bank of England, who spoke at my daughter’s school, and while the subject was Internationalism, he subsequently had to field a few challenging questions about Brexit. Like any professional operator, he dodged them with silky agility and humour. And while he left us with nothing new on Brexit, internationalism and the need to keep attracting workers to the UK as much as getting UK nationals working abroad is key to everyone’s future.
Overall then, I suppose we are all currently unsure of what is to come but judging from the current situation, neither the Whitehouse nor Brexit are having the apocalyptic impact some people predicted. For the moment, everyone is doing the sensible thing; still hiring, still expanding, still developing and still innovating.
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