Computer security continues to grow in importance as the already strong digital trend has accelerated with new challenges from the COVID-19 pandemic. Despite all the disruption to the UK economy, revenues in computer security have grown by 14% in 2020 as new challenges included remote working and increased video conferencing.

The path beyond the COVID-19 January lockdown is now emerging from government policy, boosted by the deployment of vaccines. As the economy improves, the proportional spend on security will increase as companies play constant catch-up with cyber criminals.

While the growth of the market can be expected to remain substantially greater than economic development, both equipment and software is becoming increasingly commoditised, bringing a downward pressure on the value of sales.

Cloud computing continues to progress, and generally the outsourcing of computer security is a key feature of the market with companies continuing to grapple with cyberattacks. As the internet of things, boosted by 5G technology, increases the number of internet-connected devices, strong growth opportunities remain a market feature.

Key issues covered in this report

  • How the COVID-19 impact has changed demand with remote working and growth in video conferencing

  • The continued rate of growth of the market despite the economic disruptions

  • The driving forces of cyberattacks, particularly phishing, unauthorised access and ransomware, which have increased with the COVID-19 pandemic

  • How cloud computing is impacting the market

  • How the industry is responding to continued growth in cyberattack sophistication and frequency

COVID-19: Market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March. 

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. It wasn't until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions. 

Despite these restrictions, however, case numbers continued to increase, and after a brief relaxation for Christmas Day, a full national lockdown was announced on the evening of 4 January. There is no defined end date for the lockdown: the legislation presented to Parliament extends to 31 March, but Boris Johnson has said that he hopes schools will be able to re-open after February half term.

The UK’s vaccination programme started on 8 December, and with both the Pfizer-BioNTech and the Oxford-AstraZenica vaccines licenced for use in the UK, the government aims to offer a vaccine to 15 million people by mid-February.

Impact of the January 2021 lockdown and the vaccination rollout

Our core assumptions on the path of the pandemic had always included an expectation of severe disruption to markets and consumers’ lifestyles well into 2021, with a strong likelihood that the virus would still be with us even into 2022. Although the second wave of infections and subsequent lockdown puts us towards the negative end of our initial expectations, these developments are still broadly consistent with our previous assumptions.

Similarly, MBD had factored in the likelihood that an effective vaccine would be available from early- to-mid 2021. The licensing of the Pfizer-BioNTech and Oxford-AstraZenica vaccines puts us slightly ahead of that assumption, but the challenge associated with rolling out a new vaccination programme to millions of people means that our previous assumptions are still broadly consistent with the new reality.

Economic and other assumptions

MBD’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until the fourth quarter of 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty, however, means there is wide variation on the range of forecasts, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The second wave of infections and subsequent lockdown means that the short-term prospects for the country are consistent with the OBR’s negative scenario, but this needs to be balanced against the fact that the vaccine rollout is ahead of even the OBR’s central scenario. Medium to long term, then, we are still basing our forecasts and market analysis on the OBR’s central economic scenario.

Products covered in this Report

For the purposes of this Report, MBD has used the following definitions:

Computer security, also often referred to as cyber security, is the set of processes and technologies that facilitate business, commerce and consumer digital activity in a safe environment. Cyber security, however, is far from simple. The threats to computerised environments are many and various, and they are changing on a near-daily basis.

Threats to individual, corporate and government activities online come from three primary sources.

  • Criminal behaviour: attempts at committing fraud for (usually) financial gain.

  • Hacking: disrupting corporate or government activities by denial of service, defacing online content and generally damaging online reputation.

  • Espionage: gathering corporate or government information illegally to subvert competitive advantage or national security.

The number and sophistication of threats to the cyber infrastructure are increasing daily. Numerous reports cite the increasing number of security breaches, while newspapers regularly run stories of lost data files, hacked bank accounts and stolen identities.

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