Financial services firms will continue to invest in IT despite the credit squeeze, according to a survey by the Confederation of British Industry (CBI) and PricewaterhouseCoopers.

The two-year run of strong growth in the sector has slowed, with business volumes falling at their fastest rate since March 1991.

But capital investment plans for IT are higher than three months ago, and are both above the long-run average and at their strongest since September 1997.

The main motivation is to improve efficiency – increasingly important as financial services feel the credit crunch in other areas.

Seventy per cent of firms believe the squeeze will last longer than six months. And a significant majority believe that further deterioration in credit conditions is likely over the next six months – 24 per cent said the likelihood was high, and 65 per cent said it was medium.