The new study, which is based on GDP growth projection, historical spending trends and research into industry confidence, predicts that IT spending in Europe will decrease by 0.4% in real terms during 2003.
According to Forrester, European IT investments equalled €647 billion in 2002, compared with €865 billion in the US, and this gap is set to widen by 4.5%, or €62 billion, this year.
The report further predicts that, by 2004, IT will form only 6.9% of the European economy, compared with 9.6% in the US. It further claims that many small services firms and software vendors in countries like Germany and the UK will go out of business.
Whilst Germany will remain the largest European economy for the next three years, Forrester claims that its IT industry will not follow suit. The total UK IT trade value is likely to exceed that of Germany by 2005, with a value of €138 billion, or 9.4% of the UK GDP.
According to Forrester's report, software revenues will shrink by 2.4% in 2003, hardware makers will face flat sales and IT (non-telecom) services will experience 1.2% growth. The report predicts a shrinkage in the hardware market, with even the best case scenario showing just a 1.1 % growth.
The report concludes that telecom services will lead in 2003, with a 2.2% growth, and claims:
"While European telecom remains in the dumps, telecom-related services will outperform the overall technology market, even in the bleakest scenario. Even while telcos struggle with debt mountains and flat revenues, mobile subscribers will increase by 6 percent in Europe in 2003."