UK IT firms feeling plucky

Business confidence in the sector soaring despite double-dip recession

Business confidence among UK IT firms is brimming amid expectations that the double-dip recession will be short-lived.

According to ICAEW/Grant Thornton UK Business Confidence Monitor (BCM), IT and comms is one of just two industries that has remained consistently positive since Q3 2009, the other being energy, water and mining.

In Q2, the BCM Confidence Index for IT and comms rose from 4.7 to 26.5, the highest level since the second quarter of 2011.

Businesses in the sector expect domestic sales to grow by 6.3 per cent over the next 12 months, compared with 3.2 per cent growth in the last quarter. Despite this, export expectations have fallen slightly in the past quarter, suggesting that eurozone uncertainty continues to be an issue.

Wendy Hart, head of technology at Grant Thornton, said: "R&D expectations have also slipped a little, reflecting the ongoing challenges of recruiting appropriately skilled staff, which is a recurring challenge for businesses in this sector."

UK business confidence is also improving across the board, with the overall BCM index improving from -9.3 to 12.0.

This suggests the current recession will be short-lived, Grant Thornton said. It forecast that quarter-on-quarter growth will hit 0.6 per cent in Q2.

Michael Izza, chief executive of ICAEW, said: "Although there has been a large increase in confidence, there is still an air of fragility to the UK economy. Government needs to harness businesses' increasing optimism about the UK's economic future and turn it into sustainable, consistent growth. To squander it could consign the UK economy to stagnation for the immediate future."