As always, though, an economic downturn has a profound effect at every level of society – even if they don’t make the headlines. The IT industry, for instance, is feeling the haunting presence of the current crisis. In particular, system builders are feeling the squeeze as component prices rocket – and we’ve asked several of them for their thoughts on the future and how they’re planning to cope.

The problem is a global one, but home-grown businesses are also feeling the effects. “The whole IT industry functions in dollars”, says John Medley, Reviews Manager of British firm PC Specialist. This system avoids the problem of having to deal in different currencies in many countries, such as Hong Kong, China and Taiwan, where the majority of PC components are made.

It may be convenient for doing business, but the weakening of the pound against the dollar – as well as the increasing cost of raw materials and wages where the parts are manufactured – means that less can now cost considerably more.

Martin Sawyer, Senior Sales Manager of Chillblast, echoes many of these sentiments, attesting that “keeping a competitive retail price has been extremely difficult” in the current climate. As well as the aforementioned exchange rate difficulties, the US currency has also weakened against those in the Far East, producing a “double-whammy” effect.

This has a profound effect on the way that many British computer manufacturers are conducting their business. “Prices have gone up by as much as 25%” says Jonathan Bakewell, of Eclipse Computers. This has resulted in several businesses being stuck between the proverbial rock and hard place. On one hand, they can purchase excess stock to maintain the same level of profit margin that they’re used to – but, with PC sales falling, this brings far more risk into play.

It’s an impact that’s been felt by PC Specialist, too. John Medley explains: “each time we order we’re paying more for stock, thus reducing our margins on that particular batch.” It’s a situation that won’t be resolved until, he says, the various currencies around the world begin to stabilise.

In the meantime, businesses have to decide whether to make customers pay more or to bite the bullet and reduce profit margins. PC Specialist is trying to use both approaches, saying that while it may be “passing on cost increases to our customers” on some systems that it’s also keeping prices low where they can – by using stock that was bought and stockpiled when exchange rates were more favourable.

Eclipse is facing a similar predicament. “Normally”, explains Bakewell, “companies use these situations [of purchasing excess stock] to make extra margin, but since business has been low, companies have kept their margins the same.” While this means that prices look good when compared to those of competitors, it’s still not ideal with extra sales – or even maintaining a steady level of sales – certainly not guaranteed.

Problematically, some of the most important components are those that are seeing some of the biggest price rises. Sawyer has experienced the price of popular Intel chips, including the Core 2 Quad Q6600 and Q9550 and Core 2 Duo E8600 and E8500 “increasing by as much as 40%”, and “OEM copies of Windows Vista rising [in price] by over 50%.”

Chillblast has also seen some unusual effects from the credit crunch: whereas a new generation of Intel processors normally causes a furore as people try to upgrade, demand for machines equipped with Core i7 processors has been slack, with few people investing despite the product’s undoubted quality.

Sawyer lays blame at the door of some of the big manufacturers, too. While a minority are providing rebates and incentives to make buying components easier, “far too many are doing nothing to prevent the UK computer industry from getting into serious difficulty”. Several manufacturers have had to close their doors in recent years – including Evesham, Carrera, Time and Tiny – and he sees this trend continuing unless the situation changes and the industry is afforded a level of protection.

Medley has a different take on the situation, though: “it’s not that prices are increasing,” he argues, but that “they’re returning to what they used to be before the pound became such a strong currency against the dollar”. It’s an interesting point of view that suggests the days of £300 or £400 desktop systems could be numbered – and that, rather than losing out, we’ve merely been having it too good for too long.

We’ve become accustomed to prices always dropping and getting more for our money: in issue 160 of PC Pro, the Mesh Matrix Venom provided a 2.2GHz AMD Phenom 9500 CPU, 4GB of RAM, 750GB of hard disk space and two ATI Radeon HD 3850 graphics cards for £1,155.

Now, the Mesh Titan GT Pro offers a 3.16GHz Intel Core 2 Duo E8500, 4GB of RAM, 750GB of hard disk space – as well as an Nvidia GeForce 9600 GT graphics card – for a mere £575. The cheaper system, a year on, outscores the older Mesh in our 2D benchmarks: a reasonable 1.33 from the Matrix Venom is blown away by 1.82 from the Titan GT – a system that, literally, costs half as much.

This situation has become so familiar to us that we expect prices to keep falling – and the amount of performance we can buy for the same sort of cash to keep increasing. The state of the global economy dictates that it’ll be near-impossible for this situation to continue. Medley sees this as a double-edged sword, saying that increasing prices should see the end of “margin erosion” on cheaper systems that plenty of people are buying. Instead, prices may continue to rise and, as Medley says, “return value to our industry”.

In a world where netbooks, cheap desktop machines and money-saving deals have ruled the roost for much of this year – and, conceivably, the next – increasing prices could spell bad news for many manufacturers. However, rising prices may not deter many of the people who had been considering investing in a decent PC anyway – if they were still going to buy amidst a recession then it may be a case of a couple of extra months of saving money rather than refusing to buy at all.

This seems like an optimistic outlook, though, in the face of plenty of nervous realism from some of the UK’s more successful system builders. While Chillblast, Eclipse and PC Specialist all hope that increased prices won’t put customers off, it seems that constantly dropping prices will soon be replaced by a more volatile marketplace entirely. It’s good to see several of the UK’s most prominent system builders remaining reasonably upbeat during an incredibly unpredictable time – we certainly hope that they can ride out the recession and emerge unscathed.