Recovery on the horizon
UK economy set to improve, says BDO report
The UK economy is starting to bounce back and interest rates are set to fall later this year, according to the latest Business Trends report from market watcher BDO Stoy Hayward.
This recovery is attributed to the 'Baghdad bounce', along with a boost in business confidence, low borrowing costs and a competitive pound.
Business output is at its highest level since the beginning of the year, the report claimed.
However, BDO said that confidence "remains brittle" as companies "smart from a long period of instability".
Peter Hemington, a partner at BDO, said: "The delayed effects of the Baghdad bounce have clearly lifted some of the gloom from the economy.
"Although confidence remains fragile, our report indicates that there is no visible threat from inflation, and we believe that the Monetary Policy Committee should be able to help the economy along by cutting rates later in the year."
Kevin Collins, joint managing director at VAR ComputerWorld Wales, agreed.
"It appears that the IT market is improving and there is more interest from the SME sector. I think our sector is in for a good 18 months as companies get IT projects moving once again," he said.
"The market has also changed. The PC element is more commoditised than before and resellers focusing on solutions are winning the business more than those just interested in shifting tin."
Eddie Pacey, director of credit services EMEA at distributor Bell Microproducts, added: "I would say there are pockets of improvement in our sector, but not necessarily in terms of incremental revenues.
"However, UK insolvencies are at their highest level for ten years and, when we are talking about recovery, we have to bear that in mind.
"I agree that there is likely to be an interest rate cut and things will be buoyant up until Christmas, but the crucial period for the IT industry will be the first quarter next year.
"The last real spend companies had was back in 1998/99 and, if you consider the general life span of hardware, they must be thinking about upgrading at some point next year."