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European IT spending to grow by 4.4pc 
Thursday, August 15 2002
by Ciaran Buckley


IT spending in Europe will grow by 4.4 percent in Western Europe in 2002, driven
by demand for IT services, according to a new report by IDC. 











According to figures released in IDC's Black Book, the 2002 growth prediction is
in contrast to the 3.4 percent growth rate in 2001. It predicted that growth will
rise to 6.2 percent in 2003, but will not return to 2000 growth levels until
2004. 



The report also predicted that all countries in Western Europe would report
positive growth in 2002, with Ireland expected to bounce back from its 2001
decline. Sweden will enjoy the highest growth in the region, increasing by 8
percent and Finland, France, Italy and the Netherlands will also see stable
growth in 2002 at 6 percent each. 



Short-term forecasts show that investment in IT services will take priority in
Western Europe but that current advances in wireless and Web technologies will
mean a shift towards higher levels of software spending in the medium to long
term.



"With the first half of 2002 complete and no significant improvement in
business conditions apparent, the chances of a near-term rebound in IT spending
in Western Europe are slim," said Vicky Hawksworth, Senior Analyst at IDC. "The
recent drop in the European stock markets following accounting revelations in the
US coupled with the downturn in consumer spending have served to aggravate this
already weak outlook."



The Western European IT market has suffered a number of major setbacks over the
past two years, such as the dot-com crash, followed by the telecommunications
slump and the knock-on effect on the hardware market. These problems have been
exacerbated by the slowdown in the world economy. 



But the report went on to identify the British and French economies as two that
were well positioned to benefit from a recovery. "A return to healthy IT
investment will be hindered until business profitability ameliorates and the
restrictions on corporate IT budgets are subsequently relaxed," said Hawkworth.
"Overall market conditions in Western Europe are not likely to start to improve
noticeably before the first half of 2003."