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Wed, Jul 04, 2001 - Page 21 News List

Tech spending slump deepening throughout Europe

AFP , FRAMINGHAM, MASSACHUSETTS

A spreading slowdown in US technology markets could reduce worldwide spending on technology by US$150 billion by 2003, according to a report released Monday.

The impact could create a "severe downturn" in western European economies, the high-tech consulting firm IDC warned.

The study was a "worst-case scenario" projection, which predicts a possible US$50 billion drop-off in European technology spending alone between 2001 to 2003.

IDC had expected a double digit-growth in technology spending throughout this year, but the company now says "some segments of the European IT hardware has clearly tempered, including weaker demand from service providers for networking equipment and a slowing growth rate for PC sales.

"Software and services are still expected to show strong growth this year," said Stephen Minton, an IDC research manager and analyst, in a statement. "Similar to the story in North America, we expect that any economic slowdown would have its most severe impact on hardware demand. Historically, hardware spending is highly vulnerable to swings in the overall economy."

IDC is still forecasting 11 percent growth for tech spending in western Europe this year, but warned that total could grow only 7.9 percent. That slowdown could continue into 2002 and 2003, the report released Monday warned. Inflation makes Germany and Italy more vulnerable to the slump, with the UK expected to be more "stable," the report said.

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