Boston, MA -- (SBWIRE) -- 08/27/2013 -- The UK IT market is being squeezed by fiscal austerity measures, fragile business and consumer confidence, and a decline in desktop and notebook shipments. However, there are areas of growth that are offsetting these pressures, such as demand for tablets, investment in datacentres and uptake of cloud computing services. Taking these factors into account UK IT spending is forecast to increase 2.2% to GBP53.339bn in 2013, a turnaround from the 0.6% contraction in 2012. The IT market should see improvements as the economy moves further out of recession over the medium term and we expect total spending will reach GBP59.975bn by 2017. There is, however, downside to this outlook, with flashpoints in the eurozone, including Spanish refinancing requirements, potentially derailing the UK recovery.

Headline Expenditure Projections

- Computer Hardware Sales: GBP11.748bn in 2012 to GBP11.948bn in 2013, +1.7% in local currency terms. Desktop and notebook sales have been hit hard by the growth of tablet sales. However, the arrival of slimmer and higher spec notebooks, as well as hybrids/convertibles should rebalance growth over the medium term.
- Software Sales: GBP7.571bn in 2012 to GBP7.723bn in 2013, +2% in local currency terms. Software spending growth is occurring in key areas such as security solutions and big data analytics, while Windows upgrades are also a factor.
- IT Services Sales: GBP32.893bn in 2012 to GBP33.668bn in 2013, +2.4% in local currency terms. Fiscal austerity measures have squeezed IT vendors on price, but cloud services remain area of growth offsetting some of the impact of austerity measures.

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Risk/Reward Rating

The UK's score was 82.2 out of 100.0. The UK ranks first in our latest Europe IT RRR table, still ahead of Germany, France and Sweden.

Key Trends And Developments

- Although the UK market remains in a relatively weak condition due to low business and consumer confidence and cuts to government expenditure there are some key areas of growth. For instance, H113 saw major datacentre investments by leading global players. In May 2013 both Salesforce.com and Oracle announced investment in datacentres in the UK. The Salesforce datacentre will serve European markets, as the SaaS provider meets consumer demands for European datacentre presence due to concerns over the legal status of data on US servers. Meanwhile, Oracle's new datacentre will be dedicated to serving the government through the G-Cloud initiative, which is set to account for a growing share of government spending. BMI believes enterprise demand for European storage and the UK government's commitment to adopt cloud services where possible will drive further investment in the market.

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