IT spending across Europe is under even more pressure and budgets will grow by just 1.6 per cent in 2006, compared to 2.9 per cent last year.

Researchers from Forrester found that more than half of European firms plan to reduce IT budgets this year. The main priority across Europe is for spending on security, anti-virus and host intrusion detection.

For IT services price pressure is the main concern, with nearly half of European firms saying that cutting costs is an important or critical priority for the year ahead.

Miguel Angel Mendez, associate analyst at Forrester Research, said the caution on IT spending was at odds with people's more optimistic view of their own industries - 60 per cent of respondents expect the coming year to be good or OK for their industries.

The feeling in the UK seems slightly more optimistic - British firms expect to increase IT spending by 2.3 per cent, but only 20 per cent of this will go on new developments. Big technology brands such as Cisco, HP, IBM, Microsoft, SAP and Oracle get the lion's share of purchasing preferences.

Forrester spoke to 506 companies across Europe.®

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