In December 2019, nobody could have predicted the global impact that COVID-19 was about to have. Pre COVID-19, for the ICT industry, as will practically all industries, the forecast in spending growth was both straightforward to calculate and relatively accurate. 12 catastrophic months later and the EU has experienced economic turmoil like never before.
In the first half of 2020, real GDP fell by double digits. Governments scrabbled to put support packages in place to prevent the situation from getting worse. This included a 750-billion-euro fund created by the European Council for the Next Generation EU (NGEU).
ICT in Europe Pre COVID-19
Technology in Europe is simply massive with the industry employing 11.5 million people and generating an annual turnover of 2,173 billion euros. Annual exports account for 567 billion euros. There are 770,000 ICT companies in Europe, many of which are SMEs and microbusinesses.
Any estimations before the COVID-19 outbreak have been dismissed as the uncertainty of the future still remains. In fact, while the outbreak is still apparent in many European countries, it is difficult to even begin looking at new estimations. Below, we will look at what statistics have emerged.
ICT Manufacturing in Europe
As businesses across the globe came to an unexpected halt, imports and exports followed suit. The impact of COVID-19 was seen in the sharp decline in supply and demand. It is estimated that between 50% and 80% of European technology companies experienced issues with their supply chain. Furthermore, tech companies were only running at 60% of their normal activities in April and May of 2020. As manufacturing factories close down, it is going to be hard to understand IT budgets until the second quarter of 2021. And this is assuming that more lockdowns aren’t imposed as winter hits.
ICT Employment in Europe
From 2019 to 2020 there was a 5% decline in ICT employment across Europe. This low figure is mainly due to the public funding put into place so that companies could keep employees on despite not running at full capacity.
That being said, these funds will soon come to an end, if they haven’t already. If companies aren’t able to carry out normal business operations, they may not be able to keep all of their staff on once the funding dries up. It is still likely that unemployment could fall further as we go into 2021 and 2022. Estimates put the average European unemployment rates at 8.6% for 2021 and 8% for 2022.
How Quickly Can the ICT Industry in Europe Recover?
Economists are not certain enough to state numbers too quickly and reports and estimations will vary, often due to the optimism or pessimism of each research group. By the end of 2020, the International Monetary Fund states that the world economy is likely to contract by 3% and the Eurozone economy by 7.5%. This is estimated to rebound by 4% in 2021 and 3% in 2022. So, it will be at least 2 years before the European economy will return to pre-COVID-19 levels.
Overall, spending is likely to drop by 3.8%. The telecom industry has seen a small decline this year. Despite an increase in telecom services because of remote work revenue has been lost because of less demand for mobile roaming services. Software spending will also see a slight fall of 0.1% but this is mainly due to projects being put on hold because of uncertainty.
Most experts agree that the European ICT market won’t show signs of new growth until 2022.
Positive News for ICT in Europe Post-COVID-19
Right now, it is difficult to see the light at the end of the tunnel—but it is there. The pandemic has highlighted the fact that Europe must continue with the huge digital leap it experienced throughout the 2020 health crisis. Some areas of ICT have already begun to see significant changes as educational institutions invest in ICT solutions to enable remote learning. Spending in ICT in the healthcare industry has been strongly positive as healthcare providers find innovative ways to treat and monitor patients. We have seen increased spending in AI in particular, from wearables that can monitor certain conditions to virus tracing apps.
While it is true that the near future will be challenging and still uncertain, with a digital-first approach across Europe, the ICT spending growth rate has all the potential to increase from 2022 and beyond.