Resellers cash in on services crisis

The Confederation of Business Industry (CBI) and Deloitte and Touche have revealed that service industries are undergoing a crisis in business optimism - leading to more business for resellers.

The bubble is predicted to burst for the consumer and the business sectors, and also the professional services sector - which totals 20 per cent of the UK's gross domestic product (GDP) - over the next three months.

Martin Scicluna, chairman of Deloitte and Touche, revealed that consumer services would bear the brunt, as they already 'see a sharp cut in the value of future business, so it is not surprising that consumer services companies expect to continue cutting jobs'.

Sudhir Junankar, associate director of economic analysis at the CBI, added: 'Although these sectors have seen an increase in the amount of business they do, those reliant on ordinary consumers are not expecting this to continue. This survey suggests that cost pressures and falling prices may squeeze company profits.'

However, the dark clouds do have a silver lining for resellers. All service providers are looking to spend more on IT in an attempt to increase efficiency. The other drive for an increasing IT spend is the preparation of systems for the millennium.

The outlook for Christmas in the retail sector continues to appear ominous, according to another CBI survey. Retail sales volume for November fell to the lowest point since March 1995, well below retailers' estimates.

Junankar said: 'The decline in retail sales in November took retailers by surprise, leading to the largest fall in confidence in the survey's 15-year history.'

He added that Christmas may be better, but only if prices are cut to encourage customers in to stores.