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Richard Holway, Britain's best known computer industry pundit, has turned bearish on the UK software and services sector.

Speaking at a City law-firm seminar yesterday, he warned that companies in the sector would have to endure two more years of sluggish growth - around ten per cent per annum - and collapsing earnings, after enduring a very poor 2000. Profits this year for the sector will slide into the red for the first time since 1990-1991.

He also predicted the computing services index, the Holway benchmark on which Techmark was based, will fall by 25-50 per cent in the next six months.

Noting that the UK computing services industry generated £9 billion a year in international revenues, Holway argued that it faced serious disincentives at home, the FT reports. His list of complaints includes tax threats to flexibility of employment, staff shortages and "crazy" stock options. ®

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