Companies across Europe will not be increasing their IT budgets in 2005 with the same enthusiasm as in recent years, according to analyst house IDC. The firm predicts that the IT sector will see "modest" growth of around four per cent this yeaer, as companies deal with the economic fallout of currency fluctuations, high oil prices and rising unemployment.

Marcel Warmerdam, director of IDC's European Black Book service said that spending was being inhibited by a tepid economy, adding that companies were struggling to release budget for new projects. "The market environment is still improving from last year, but IT spending in Europe is now expected to lag the U.S. and other major economies during 2005," he said.

The strength of the euro against the dollar caused significant problems in 2004. Measured in euros, the IT market grew just three per cent. In dollars, it looks much healthier, gaining 12 per cent over the year.

Warmerdam said that things will stabilise, long term, predicting healthy growth will return in "the next few years", driven particularly by investment in business intelligence software. In the short term, however, he argues that economic uncertainty and a belief in 'good-enough computing' will put the brakes on during 2005. ®

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