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IT sector showing signs of credit crunch as costs of borrowing rise

Simon Quicke

Despite the apparent optimism and talk of certain sectors being immune from the pressures of the downturn the ICT market is being hit badly by the credit crunch.

The latest findings from Siemens Financial Services make gloomy reading for those that had though the IT and telecoms sectors were coping with the current problems.

Across the board, over a range of all major industry sectors, 25.3% of British companies have seen their cost of borrowing increase since the credit crunch started last year,

Almost a third of those companies operating in the ICT market place, 27.8%, have already been told by their banks that interest rate increases are on the way. Already 18.5% of IT and telecoms companies have seen the banks adjust credit limits downwards, which is worse than the UK average of 8.7%.

Peter Austin, general manager at Siemens Financial Services said that the survey showed the problems in the wider economy were filtering through to the IT sector.

"Clearly they are being affected by the double blow of tightening credit conditions and customers' delaying investments due to their own cash concerns," he said.

Mark Ancell, head at intelligence at Graydon, said that the cost of borrowing had almost doubled in the past couple of years and it was a global problem and those that had enough money in the bank to avoid borrowing were best not to.

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