Investment in IT equipment by European SMEs set to increase by almost a fifth to €73bn, driven by the the UK (€21.5bn investment in total, up 56%), followed by France (€18.6bn, up 56%). Upgrading IT equipment to enhance efficiency is a top priority for Western European SMEs over the next 12 months, according to GE Capital International's Q1 2014 European SME Capex Barometer. This represents a 15% increase on spending intentions versus the same time last year.
The research, conducted among over 2,250 SME business leaders across seven European markets during Q1 2014, shows that across the big four European economies IT is the only asset type to see a significant increase in intended investment, while spend on other types of assets is set to remain stable or drop.
In Central & Eastern European markets (Czech Republic, Hungary & Poland) IT investment levels are expected to remain broadly comparable with 2013, as manufacturing equipment assets remains a focus for capex.
Christian Bernhard (pictured above), Equipment Finance leader at GE Capital International, said: "After several years of prioritising spending on manufacturing equipment assets, SMEs now look to be increasing IT and office equipment capex, potentially in order to update their infrastructure and back office systems to match modernisation efforts at the front end.
"Given the productivity gains, cost efficiencies and competitive advantage associated with up-to-date technologies, SMEs that increase investment in upgrading IT equipment will be strongly positioned for future growth."
For SMEs across the big four economies, upgrading existing equipment to enhance efficiency and productivity is the main reason for investment in both hardware and software, with over a third of respondents citing this as a driver. This indicates a clear response from businesses to increasing missed income or loss of new business opportunities as a result of dated or inefficient equipment.
One in four SMEs (26%) in Western Europe said they had lost out on new income or new business opportunities in the past 12 months, taking the total loss in income to approximately €59bn, an increase of 12% compared to previous year.
IT investment is set to be driven by the UK (€21.5bn in total, up 56%), followed by France (€18.6bn, up 56%).
In contrast, there will be a 9% decline in investment year on year in Germany, to €20.8bn, albeit still at a very high level. German SMEs cite the single biggest obstacle to overall capital expenditure as 'having already invested' (22%), suggesting prior spend may be impacting future investment intentions. IT spending is expected to be lowest in Italy, at €11.7bn, a 20% drop from 2013 levels.
Hardware accounts for the greatest proportion of intended capital expenditure in IT equipment, with a total of €42bn earmarked for upgrading company laptops, servers and other hardware in the next 12 months.
This is driven by investments from SMEs in Germany (€12.7bn), and the UK (€12.1bn). Total spend on software is expected lower at €31bn, with UK SMEs contributing the largest proportion (€9.4bn).
SMEs in the utilities and transport sector are likely to invest more in IT equipment than in any other sectors. They plan to invest 30% of overall capex for Western Europe in IT hardware and 29% in IT software, despite only accounting for 20% of the total SMEs surveyed.