PracticeConsultingTechnology – IT gets ‘dose of reality’

Technology - IT gets 'dose of reality'

Gloomy financial predictions for 2001 are nothing to worry about, according to a report by Ernst & Young's Independent Treasury Economic Model (Item) Club.

Financial confidence in the information and communication technology sector has been hit by dotcom collapses and profit warnings, but report author and Item Club economic adviser Peter Spencer sees this as a ‘healthy dose of reality’.

‘There are profit warnings now because IT company growth has come down to a more stable 40% to 60%, which is the same as it was before,’ said Spencer.

The growth of IT investment isn’t yet registering on productivity growth rates. This will begin to show by 2002, said the report. ‘Once IT equipment begins to be used properly and more unskilled labour is trained in IT skills, investment growth will begin to register in overall growth rates,’ explained Spencer.

For further information on the report, visit www.ey.com/global/gcr.nsf/UK/The_Impact_of_ICT_on_the_UK_Econom

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