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UK likely to follow US slowdown on IT spending

World economic growth will slow in the next two years and falling spending on IT in the US is likely to be mirrored in the UK, research suggests.

The International Monetary Fund (IMF) said in its latest forecast that the US will fall into a mild recession this year with spillover effects for the UK. This would result in UK growth slowing sharply to 1.6% in both 2008 and 2009.

RBC Capital Markets, a global investment bank, surveyed 7,500 companies across the world and found that spending on IT is likely to fall as the recession takes hold.

"Businesses will defer spending on enterprise software, with 74% indicating no plans to purchase software in the next 90 days, up from 62% on the previous year," said RBC analyst Mike Abramsky in the study.

The report said corporate spending on Windows desktops may also stall with 24% planning to decrease spending, up 10% on last year's figures.

However, spending on Blackberrys is likely to remain steady as is spending on hardware to build wireless networks to make them more secure as laptop connectivity in enterprise grows.

The economic slowdown in the US has led Gartner to revise its 2008 worldwide PC shipments forecast downward but the analyst firm is still predicting growth in the mobility market.

Angel Dobardziev, practice leader for IT services at Ovum Research, said, "The challenge for IT managers in a recession is deciding what is essential spend and what is not. If a downturn happens, competition will rise, and businesses will look to IT for innovation."


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