Analysts back-peddle on IT spending forecasts

Research house IDC has done a swift U-turn on first half predictions that suggested European IT spending would not be affected by sluggish growth in the US.

It now estimates up to $150bn could be wiped from global IT markets - with European markets falling by $50bn - over the next two years as IT directors tighten their belts.

The research house had previously predicted 11 per cent growth in European IT spending for 2001, after claiming earlier this year that the slight slowdown in European economic growth would not hit IT spending in the region because of different market dynamics.

But now IDC reports that a 'worst case scenario' could see the European market grow just 7.9 per cent in 2001 with the slump likely to continue into 2002 and 2003 as Europe moves to the euro.

Stephen Minton, manager of IDC's global economic outlook research program, said in his research: "For European suppliers the importance of understanding the broad economic picture has never been more important.

"Events in the US have dispelled the myth that technology spending is immune to slowdown."

Hardware sales are expected to be hardest hit, with sales of service provider equipment and PCs already tailing off.

Minton predicts that most at risk countries are Italy and Germany, with the UK remaining stable.