Gartner pares IT spending outlook on debt crisis

IT analyst company Gartner says that the dollar value of global IT spending in 2010 will be less than it previously thought, due to the devaluation of the euro and Europe’s sovereign debt crisis.

It had predicted that worldwide IT spend would reach $3.4 trillion in 2010 – a 5.3% increase from 2009. But it has now cut this figure by 3.9% to $3.35 trillion, which represents a 4.7% yearly increase.

The size of government budget deficits of a number of European countries has lead debt rating agencies to downgrade the value of their government bonds. This decreases the value of the Euro, meaning that the money European countries spend on IT this year will be worth less in dollars.

“The European sovereign debt crisis is having an impact on the outlook for IT spending,” said Gartner research vice president Richard Gordon. “The US dollar has strengthened against the euro during the second quarter of 2010, and this trend will likely continue in the second half of 2010, which will put downward pressure on US-dollar-denominated IT spending growth.”

Gordon added that cuts in “longer-term, public sector” spending in the continent over the coming years had also encouraged the analyst to dock $50 billion from its forecast.

Last month, the UK announced its own public sector IT spending reduction of approximately £95 million, while the government has also taken steps to place tougher scrutiny on how projects are procured, including the moving of purchasing body Buying Solutions to the Cabinet Office.

Gartner warned that the impact of such austerity measures will have a “ripple effect” on government suppliers in the private sector.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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