Scale of UK IT spending cuts revealed

IT investments have been pared back

UK firms cut investments in hardware and software by nine per cent during the first quarter of 2009, according to the latest government figures.

With companies responding to the economic downturn, the extent of IT budget cutting has been revealed by the Office for National Statistics (ONS).

The figures show that IT has been targeted as a prime area for cost cutting. Overall business investment dropped 6.8 per cent in the first quarter of 2009, compared to the first quarter of 2008.

The ONS reports that private sector businesses spent £1.53bn on software and £1.54bn on hardware in the first three months of 2009, compared to £1.68bn and £1.70bn in the year-ago quarter.

Spending was also down for both software and hardware from the final quarter of 2008.

Cutbacks in the construction sector were the most swingeing – year-on-year spending on software dropped by 42 per cent, hardware by 38 per cent.

Other sectors where IT spending was slashed include manufacturing, where hardware spending fell by 32 per cent, and services firms, where software spending dropped by 18 per cent.

Despite the overall gloomy picture, in some areas IT spending increased. In distribution services, spending of software rose 24 per cent year on year; and the companies included in the ONS's "other production" category increased spending on hardware by 44 per cent and software by 24 per cent.