Sales of smartphones in Western Europe are expected to fall 7 per cent to 141 million this year, as consumers shun expensive upgrades on devices offering little more than an incremental updates.

Worldwide smartphone shipments DOWN for first time ever READ MORE

Globally, smartphone sales will rise just 0.2 per cent this year to 1.95 billion in 2018, according to research from analyst firm CCS Insight. Growth will remain slow until 2022, when 2.02 billion phones will be sold, it said.

The demand for smartphones in Western Europe fell 3 per cent in 2016, and 2 per cent in 2017.

Ben Wood, analyst at the firm, said the fall in Western Europe was "a significant downgrade" in its previous predictions.

He said: "We've seen the market move dramatically. If you look at devices competing for consumers' discretionary budget, there is less incentive to upgrade smartphones than ever before."

Consumers are also getting more savvy about mobile phones. "People used to sleepwalk to an operator and would spend £30 per month for a phone they'd keep [for a short time] and then upgrade. But they've started doing the maths, that if you buy outright and get SIM-only deal it can be far more economical."

If you look at devices competing for consumers' discretionary budget, there is less incentive to upgrade smartphones than ever before.

He said the Western European market is an indicator of what will happen in other mature markets such as North America, which is expected to see a drop in smartphone sales of 3 per cent this year. Meanwhile emerging markets such as Asia Pacific will help buoy global spending - although in China it is expected to remain flat, he said.

But the 5G hype is expected to boost the flagging market in mature economies in the coming years.

Gazing into its crystal ball, CCS believes that after 2020 over 600 million 5G-enabled mobile phones will be sold.

"If you look at any consumer electronics tech, much of the upgrade path is predicated on saying 'you’ve got the old one, you need the new one'. Absolutely 5G is going to be the carrot that phone makers are going to anchor sales with."

He added: "If network operators, phone makers and retailers are betting on 5G there is a real urgency to come up with reasons why we need that technology. I'm not questioning the arrival of the technology, but we will have to question the business case."

Operators recently dug deep to gain a slice of 5G spectrum, in Ofcom's recent auction. O2 shelled out £317m on 40MHz of 3.4GHz spectrum, key to the rollout of 5G in the next two years, while Vodafone spent £378m and EE £303m and Three forked out £151m.

Ofcom has set a timetable for the launch of 5G services in Britain by 2020, with early trials set to take place as soon as next year.

However, last year chief exec of BT, Gavin Patterson, admitted the former state monopoly is struggling to make a business case for 5G investment, given the huge costs of getting the network off the ground. ®