As the hope of an uplift in economic fortunes diminishes, banking and insurance organisations are redrafting their investment plans, with a slowdown on IT spending firmly on the hitlist.
According to a report from the CBI in conjunction with PricewaterhouseCoopers (PwC), almost half (47 per cent) of the 79 organisations questioned in February and March said volumes had decreased. A balance of 19 per cent (positive responses deducted from negative responses) said profitability was weakest since March 2003 and a net 25 per cent said they had cut jobs over the past three months.
Indications are that across the board IT spending will be flat for the year.
CBI chief economics adviser, Ian McCafferty, said in a statement: "We can expect further tough times in the financial sector and as this feeds through into the wider economy, it will inevitably be felt through slower growth this year and next."
Banking and securities organisations said IT spending will fall, alongside general staffing. However, building societies and general insurance companies saw business gains recently and expect to invest more in IT in reaction to regulatory changes and multichannel expansion, respectively. However, both markets will begin to see a downturn in three to six months.
In a statement, PwC UK banking advisory leader Andrew Gray said: "Despite market conditions, and a mortgage demand slowdown, building societies remain quietly confident in their ability to fund and manage their business. Although activity is expected to slow and the availability of funding to limit new business growth, the sector's improved settlement is reflected in the strength of IT and staffing plans."