Today’s (Thursday’s) interest rate decision from the Bank of England is under an even brighter spotlight than usual after the three-quarter per cent cut in the US last month to shore up plunging stock markets.

Since its first rumblings, the shock waves of the credit crunch have spread wide.

But a glance through recent Computing issues paints a confusing picture:

* As spending on the high street slowed, online Christmas sales boomed.

* At the end of 2007, financial services business volumes fell at their fastest rate since 1991, according to the CBI. But IT investment plans are at their strongest for a decade.

* Technology contractors’ wages in the sector are at an all-time high.

* In November, Cisco chief executive John Chambers sparked a sell-off of technology stocks with a warning that decreasing orders from banks could slow growth. His firm’s shares fell 10 per cent; EMC, Oracle and VMware also shed some value.

* But CA chief executive John Swainson told Computing last month that he has seen no impact. And many of the financial results announced this year show good growth.

* One study shows UK IT mergers down 21 per cent to a five-year low, with the fastest decline in the crunch-stricken final quarter.

* And investment in Europe’s next-generation media sector nosedived by 52 per cent in the same period. But another report shows a drop of just two per cent in the number of M&A deals in Europe, and a rise of four per cent in value.

Computing talked to experts across the IT sector to find out what is really happening:

The CIO view

Deutsche Bank chief operating officer for technology Daniel Marovitz:

Businesses are involved in rigorous prioritisation exercises and are shortening investment horizons for IT expenditure. These changes are less about
the credit crunch and more related to a general economic slowdown, which has affected a wide range of industries. But there is still an overwhelming demand for IT staff, and the financial services industry in particular has large unfilled portfolios with a lot of opportunities.

Corporate IT Forum chief executive David Roberts:

The credit crunch will see CIOs tightening their belts, but fears about the economy are unlikely to affect spending plans already in place. Large projects will already be business-justified and are likely to be as valid in a faltering economy as in a buoyant one. But CIOs will be preparing for an uncertain future: looking at supplier relationships and ensuring commoditised services provide best value, which could mean a boost for less well-known offshore locations.

Tesco head of operations Mike Yorwerth:

Any business must respond to the economic environment, but we have a wide IT project portfolio that will continue to deliver benefits. Negative talk around the economy and likely future trends will be taken into account over plans for the year ahead.

Jeff Roberts, chief information officer, law firm Norton Rose:

Neither myself nor the other CIOs I know have concerns about a change of strategy caused by the crunch. So while keeping an eye on the market, it’s business as usual ­ensuring projects are aligned to the business, but understanding what must be done first so that if market adversity does bite we can pull back.

Investments I wouldn’t put off include disaster recovery, data centres, and critical client-facing systems. Projects such as hardware and software upgrades could be deferred. But getting deferred projects back on track later can be a challenge because of losing contractors and not being able to get the expertise back.

CIO Connect managing director Nick Kirkland:

CIOs remain confident. Some 44 per cent of our members believe IT budgets will stay the same in 2008, with only 24 per cent expecting a drop. There may be pressure to re-adjust investment plans, but CIOs are capable of cutting their cloth to meet changing needs. There appears to be a move towards outsourcing, with 47 per cent saying spend will go up this year, and only 16 per cent believing it will fall.

The investor view

David Carratt, managing director, venture capitalist investor Kennet Partners:

Lack of credit makes it harder for companies to finance themselves. In the IT sector, firms tend to be small and have unpredictable cashflows, so the immediate effect has been low.

In general, investors are trying to avoid buying into sectors that are using debt, so the technology industry has actually become more attractive. Investors are looking for safe assets, so they are buying into technology more than they were before.

However, the credit crunch also reduces demand for IT, because companies are
reining back capital. I would say most banks will cut IT spending by five to 10 per cent. And financial services represent a large percentage of technology investment, particularly in the UK.

Merrill Lynch small cap strategist Steven DeSanctis:

In our view, the technology sector has not been rewarded for the structural changes it has undergone over the past 15 to 20 years ­ such as a more diversified product base, high levels of cash, rising dividend payouts and increasing earnings stability.