The Confederation of British Industry (CBI) has said the slowdown in the financial services sector means there will be no increase in spending on IT this finacial year.
In its latest financial services survey, carried out in conjunction with Pricewaterhousecoopers, the CBI said the credit squeeze has led to the sharpest fall in business volumes, employment and profitability in five years.
As a result firms are holding back IT spending. "Plans for capital investment in the year ahead are very weak, with plans for spending on IT flat," said the report.
The trend could continue into 2009 if things do not improve, according to Ralph Silva, analyst at Towergroup.
"We do not believe that large banks would dare make such a radical change such as core banking replacement in 2008 because of economic conditions," he said.
He added that this year's IT spend will go on fixing severe problems and addressing regulatory issues such as the single European payments area, the Markets in Financial Instruments Directive and the Basel 2 financial regulations.