UK IT spending recovery lags behind

A review of the current and future levels of IT investment shows that the UK will be among the slowest economies to recover.

In its quarterly report on the state of IT investment Forrester said that the US and Asia will lead the recovery, with spending starting to rise in the final quarter of this year. The recovery is expected to be slower in Europe, where the UK and Spain will lag behind countries such as Germany and France.

"The European Union was slower to get into the downturn and will be slower to get out of the downturn," report author Andrew Bartels told V3.co.uk.

"A number of economies in Europe were less aggressive in stimulus spending. Some markets in France and Germany will show some early improvement, but most forecasts I've seen are showing weaker growth than the US, with the UK and Spain not recovering until 2010."

Spending on computer equipment, networking hardware and licensed software all fell sharply in the first half of 2009 as companies hoarded capital. Computer sales fell by more than 15 per cent, and communications equipment and software sales were down by more than nine per cent.

IT consulting purchases fared better, falling by 6.2 per cent, while outsourcing spending fell 2.1 per cent. Software-as-a-service revenues actually grew during the downturn.

Bartels explained that new data from the government showed higher than predicted spending in 2007 and 2008, making the falls of 2009 even greater. The report said that Forrester's initial forecast of spending in 2009 was a fall of 5.1 per cent, but that this had nearly doubled to 9.3 per cent.

"A large part of market forecasts is tied back to historical numbers from the US Department of Commerce," he said.

"Every July or so they go back and do benchmark revisions. So the numbers jump around and in this case the data showed that 2008 had higher levels of investment than the prior numbers had been."

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