Less growth in public sector spending and export sales than previously expected, has led confidence in the business outlook among the IT industry to wane, reveals a survey today.

Despite this decline in confidence from 63% to 50% over last six months, the majority of respondents to the second KPMG/Intellect survey expected growth to continue for the next six months.

The bi-annual survey, ‘ICT Watch: A View to The Future’ is conducted by KPMG among members of Intellect, the UK trade association for the IT, telecoms and electronics industries.

While the majority of respondents (61%) are positive about the prospects for UK private sector spend fuelling growth, the percentage of respondents who feel confident in the ability of public sector spending to do the same has reduced from 61% to 46% over the last six months. Among smaller companies, with a turnover of less than £10m, only 29% see public sector spending increasing growth.

The survey collates respondent’s views on five key business indicators; sales volumes, sales value, export sales, profitability and total staff numbers. In particular, there was a shortfall in export sales compared to predictions, only 36% of respondents experienced an increase over the last six months, compared with 55% who had expected to.

John Higgins, director general of Intellect said: “While the survey highlights some challenges for the ICT sector, it also shows that the outlook for the industry is mostly positive with the majority of respondents continuing to forecast growth across all five key indicators.”

Looking ahead 71% of respondents agree that further convergence of telecoms, broadband and broadcast media will benefit their businesses and 65% see the increasing uptake of open technologies and standards as also having a beneficial impact.

The survey also indicates that more investment in science and technology education continues to be regarded as the key external initiative that would benefit growth prospects in the software, IT services and electronics industries.

Crispin O’Brien, head of technology for KPMG in the UK said: “While the IT industry widely expects public sector spending to slow from the historically high levels seen in recent years, the failure of private sector investment and export sales to live up to the predictions of the last survey, has resulted in this dimming of optimism. Whether this is a longer term trend, remains to be seen, but the immediate future looks less certain than previously.

“In addition, the survey again highlights that the long term challenge for ICT industries continues to be education. The current decline in Science, Technology, Engineering and Maths graduates presents a major skills gap for the industry which needs to be addressed.”