Sharp rise in UK firms planning redundancies

The number of British firms expected to make redundancies among their staff in the next few months has risen "sharply", suggesting that the tougher economic climate has started to hit the UK jobs market, according to a new report today.

A survey of more than 1,500 employers showed that almost two out of five intended to lay off some workers, compared to fewer than one in five last autumn.

The Chartered Institute of Personnel and Development (CIPD) said its study also showed that one in four firms expecting to make redundancies believed that at least 10 staff would lose their jobs.

Redundancy intentions had increased in all sections of industry since the end of last year, the research revealed, and were highest in the East and West Midlands and South West England regions.

The least affected areas were set to be Scotland, Wales, Yorkshire and Northern Ireland.

The CIPD's chief economist John Philpott said: "Employers' initial reaction to talk of an economic slowdown was to hold fire and take stock of the emerging situation, but a substantial number now expect to trim their workforces, in the private sector because squeezed by a combination of tougher trading conditions and higher costs and in the public sector because being required to make further efficiency savings and cope with tighter budget settlements.

"With net recruitment activity still positive, signs of mounting employer pessimism shouldn't be read as evidence of a jobs market approaching meltdown. But it does suggest that the UK is entering a period of slower employment growth and somewhat greater job insecurity than in recent years."

Employers said they were even more dissatisfied with the skills of jobseekers – more than half expected recruitment difficulties.

Andrew Smith, chief economist at KPMG, which helped with the research, added: "The survey reflects the general uncertainty about the economic outlook."