Boston, MA -- (ReleaseWire) -- 10/08/2012 -- BMI View: UK IT spending is expected to reach US$81.2bn in 2012, up 2%, with BMI downwardly revising its forecast, following the UK's return to recession in early H112. UK PC sales did report growth in Q112, following five consecutive quarters of contraction. However, the upturn was attributed more to inventory clearance than any improvement in underlying demand conditions. The overall outlook for UK IT spending in 2012 is one of modest growth, which again lags that of some other major European markets. The UK IT services market recovery in 2011 was mixed, with signs of a revival, overshadowed by the impact of government cuts in IT spending and a moratorium on projects with a value of more than GBP100mn.
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Headline Expenditure Projections
Computer hardware sales: US$17.0bn in 2011 to US$16.8bn in 2012, -1% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors and analyst modification, although the growth in Q112 should have helped clear some of the excess inventory that had stockpiled during 2011.
Software sales: US$10.8bn in 2011 to US$11.1bn in 2012, +1% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modifications, but UK spending on cloud computing could double by 2014.
IT Services sales: US$51.7bn in 2011 to US$53.3bn in 2012, +1% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modification, with an environment of fiscal retrenchment causing the coalition government to renegotiate a number of existing IT contracts.
Risk/Reward Ratings: The UK's score was 82.9 out of 100.0. The UK ranks first in our latest Europe IT RRR table, still ahead of Germany and Sweden, and despite the poor performance of its PC market in 2011.
Key Trends & Developments
- A major factor likely to restrain demand in 2012 is the government's tough austerity programme, which has targeted an average of 19% cuts across departments over a four-year period through 2015. In March 2011, the government claimed it had achieved savings of GBP1bn, although detailed figures were not available. Meanwhile, the GBP12.7bn National IT Programme for Health (NPfIT) was finally scrapped in 2011.
- The government's efficiency drive may create opportunities in areas such as cloud computing and offshoring, where pilots have been launched. While the centralised health IT provider model has been cancelled, individual components of the plan will still be implemented. The government has also announced plans to liberalise its procurement process and increase the use of open-source software in government.
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