Anyone who has visited the US or the Far East will have found themselves going misty-eyed and waxing lyrical on the subject of 'how cheap things are over there'. But you don't have to cross an ocean to see bargains.

The difference in the price of new cars in Britain and mainland Europe - they are often as much as 20% cheaper on the continent - has many people hopping mad.

The UK's Director General of Fair Trading has concluded 'the market isn't working', and has now ordered the Monopolies and Mergers Commission to investigate whether or not cartels exist in the car industry.

Whatever the cause, people are realising that we must be paying over the odds in the UK for a whole range of goods and services. But do we complain? No, that's not the British way, is it?

So that decision to investigate high prices in the UK will come as music to many people's ears. Trade and industry minister Stephen Byers says he has identified this as a key obstacle to the concept of a harmonised Europe.

If you want proof that things cost more here in the UK, there is plenty of it around. Bureau European des Unions de Consommateurs (BEUC), the European consumers' organisation, carried out a survey last year in 52 cities across Europe in which it compared the prices of 400 different products. From this it produced an index of the cheapest and most expensive countries.

The UK turned out to be the dearest of the 10 countries sampled, with a rating of 124 overall. By comparison, France scored 107, Luxembourg 102 and Germany a rating of 100.

Report after report, survey after survey, they all come back with the same result - when you compare like-for-like goods, we in the UK are paying more than just about everyone else in the developed world.

Sure enough, it's the same story with IT equipment - both hardware and software. Feel like paying through the nose? No? That's unfortunate, because the chances are you're going to.

There is a painfully simple solution to all of this, of course. If stuff is cheaper somewhere else, then go somewhere else to buy it. Plenty of people import cars from Holland and Germany, and even from the Far East, so why not do it with IT?

The practice of buying from non-standard, unauthorised outlets is often referred to as buying from the grey market.

The grey market is a bit like the black market, except in this case no one's actually breaking the law - just risking the annoyance of original manufacturers.

There are big savings to be had from going grey. For example, an IBM PC 300GL, with PII 400MHz chip, 32Mb memory and a 4.2Gb hard drive running Windows 98 would set you back about #814 in the UK, but bought on the European mainland, the same PC will cost you #689. That's a 15% saving.

How about a Cisco 1601CH router? It'll cost you about #779 here and only #649 on the other side of the channel.

Mike Almond is business development manager at ProSource, a company which specialises in finding this sort of deal for its customers. Using a combination of overseas contacts and the Net, ProSource keep tracks of international prices on a daily basis. When asked by a customer for a particular product, it can go out and find the best price.

'We're not saying we're better than established channels or that our approach is the right one for organisations to adopt, but our results speak for themselves. More importantly, we offer an alternative option to our customers. That's what a free market should deliver,' Almond says.

'It's not difficult to find this stuff. Some manufacturers will discount heavily in particular countries to make in-roads into that market. We can use those markets to buy products back cheaper.'

There is, of course, a catch - buy your kit from another country and the manufacturer's warranty is invalid when you get home.

No warranty means no technical support, no helpline advice and certainly no upgrades. Some manufacturers are so inflamed at the thought of people saving money like this that they will not just refuse support, they will also claim the law is being broken. This is despite the fact that Europe is now a single market.

Phil Humphries is head of IT services at Surrey Police and it is no surprise that he's extremely cautious about ending up on the wrong side of the law, whether statutory or a manufacturer's warranty rule.

As part of his force's year 2000 project, a lot of equipment has been replaced, at the same time as migrating to Windows NT. He may have seen lots of expensive equipment being bought, but Humphries is not tempted by the lure of the grey market.

'I am aware that some of the things we use could be bought cheaper overseas by using the grey market, but I don't think the differences are as great as they used to be,' he says. 'Apart from which, the hassle factor would be enough to put me off.'

This is an important factor for many people. 'All too often you don't know exactly what you're buying and who you are buying it from. In the event of a problem, can you be sure you'll be able to get hold of them?' Humphries said.

But there's more to it than that. Saving money on initial capital outlay may have its attractions, but Humphries feels this is a short-term gain had at the expense of longer term success.

'We are moving away from a situation where we are buying boxes. Now we want to deal with a partner which can offer the right support we need from start to finish.'

Most of the bargain-basement IT offers that crop up in the small ads will be for software. Adverts purporting to have US versions of Microsoft Office at less than half price are fairly commonplace. David Gregory, Microsoft UK's customer legal licensing manager, warns there is more to these offers than meets the eye.

He explains: 'Our biggest problem with people using unauthorised sources is that the overwhelming majority of this software is counterfeit. It will be passed off as being from the US, but in about 90% of cases it is pirated. The individual serial number on the product tells us where that product was bought or if it is a copy.'

Finding anyone with IT purchasing responsibility who will admit to using the grey market is difficult, although one IT manager confided anonymously: 'Most of our procurement has to go through a centralised process. However, some stand-alone projects are bought on an ad-hoc basis and that's when buying on the cheap becomes a viable option.'

But why is any of this stuff priced so much higher in the UK in the first place? Almost all the major manufacturers operate different pricing policies in different countries, but few can explain why the UK gets clobbered quite so comprehensively.

As far as Microsoft is concerned, Gregory says: 'The majority of software originates from the US and there are certain unavoidable costs incurred when taking that software into other territories - local support services, language support, translating documentation and so on. Not to mention currency fluctuations.'