UK lags behind in Europe in IT optimism

Over the next 12 months, French and German companies are expecting their IT industries to grow far more than the UK's companies do, but both countries are still shedding staff and suffering from the recent economic slowdown, according to the annual UPS Europe Business Monitor survey.

Forty-four percent of French companies expect IT and telecoms to be the major driving force behind their economy for 2004, according to the survey. Around 38 percent of German firms feel the same way about IT, but 60 percent have more faith in their automotive industry. Only 28 percent of UK companies think IT will be the main growth area; instead, 53 percent of British firms expect growth in the financial services and insurance industries to outstrip IT.

IT managers can breathe a sigh of relief though, because if corporate profits fall, IT departments for companies in all three countries will be one of the last to face budget cuts, the survey said. In the UK and France, marketing, research and development and human resource budgets face the axe before IT. Only customer services budgets are safer than IT in all three big European countries.

Across all sectors, more than half of UK companies expect to be in a better financial position in one year's time, compared to just 30 percent of German companies and 26 percent of French companies. At the same time, 39 percent of companies in Germany, 29 percent in France and 24 percent in the UK expect staffing levels to fall over the same period.

This figure is least significant in the UK, where 22 percent of respondents said they would be increasing their workforce, making the loss negligible.

Mike Kiely, UPS's UK finance director, said he thought this year's results were among the most interesting in the survey's 13-year history: "The buoyant outlook from UK business leaders is extremely heartening, though caution clearly still prevails with cutbacks possible in human resources, IT and research and development budgets," he said in a statement.

This general increase in optimism was also reported in a survey by financial services firm Deloitte and Touche LLP. Chris Williams, partner at the firm, said: "Our last survey was conducted before the Iraq conflict and at the tail end of the worst downturn in the TMT [technology, media and telecoms] sector's history. We are now seeing a renewed sense of optimism and confidence. Our current survey shows an increased appetite for investment in the sector suggested by the rising stock markets."

The UPS Europe Business Monitor study covered 1,453 companies around Europe.