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Public sector gravy train to hit the buffers

Microscope contributor

The public sector oiled the wheels of commerce for many resellers during the recession but those that are too reliant on the sector face choppier times ahead, according to analysts Canalys.

In acknowledgment of the sweeping cuts to Government budgets across Europe, 100 resellers polled by the analyst expected the public sector to be the weakest sector for IT spending in 2010.

"The public sector kept money moving last year, but spending levels cannot be sustained," said Canalys analyst Alex Smith.

The market watcher noted that in a turnaround, the financial services sector - which was the first to cut spending on IT as the credit crunch emerged - has actually returned, as revealed by MicroScope earlier this year.

"Critical budget cuts across Europe will undoubtedly impact IT procurement: companies able to quickly target the private sector face the best prospect for the second half of 2010," he added.

The level of public debt across many countries in the region was a concern with even the largest economy Germany, expected to cut its budget deficit by up to €80m in the next four years.

The UK coalition is debating its own austerity measures and next week is expected to outline the cuts in an Emergency Budget.

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