UK to lead modest European recovery
by Mike Simons
04.03.2002

IT spending in the UK will pick up next year and the country will remain Europe's biggest customer for IT goods and services, according to analysts Forrester Research.

UK IT spending dropped 6.2% in last year, according to Forrester, from £33bn to £30.6bn, a smaller drop than in most other European countries.

The UK's large number of IT vendors and the UK's role as a springboard for US technology are expected to drive the recovery.

Europe-wide, IT expenditure will dip to 0.7% growth in 2002 and flatten out to 7% annual growth in 2004 because of slow population growth, years of excessive demand for IT skills, and low penetration of the Internet.

"In spite of economic unity, Europe's IT sector doesn't have the flexibility - as seen in the US sector - needed to get back to double-digit growth after the 2001 dip," said Forrester senior analyst, Charles Homs.

"With an average population growth of 0.3% per annum, European consumers' technology consumption simply can't keep up with the Americans." Homs added.

Europe's IT bubble - excessive IT spending compared with the normal growth trend - equalled £20.2bn in 2000, compared to £29.3bn in the US.

This IT overspending will hit the recovery curve of all European regions, Forrester said. The UK will recover in 2003 to remain Europe's biggest IT spender, according to Forrester.

Germany is predicted to lose ground, but will remain Europe's second biggest market; France will not recover until 2004; and Southern Europe is expected to outperform the rest of the continent.