Thursday, July 31, 2008
More than half of Britain's businesses plan to make job cuts
Jul 29 2008The number of British businesses who are planning on making job cuts in response to the increasingly dour economic climate has almost doubled over the last three months, according to KPMG’s quarterly National Business Confidence Survey. KPMG’s survey of senior executives in both public and private sector organisations indicates that more than half (53%) now plan to reduce their staff headcount over the coming months, with a similar number (52%) planning to implement recruitment freezes. Back in March 2008 when the same organisations were questioned for KPMG by Opinion Leader Research, only 29% were looking at job cuts as a cost-saving measure.Malcolm Edge, regional chairman for KPMG in the North, commented: “The clouds that were on the horizon when we first conducted this survey back in early spring are now right overhead, with businesses now feeling the impact of this so-called ‘perfect storm’ of rising inflation, tightening credit conditions and plummeting consumer confidence. With six out of ten businesses looking to cut costs, staff redundancies may seem like the obvious, albeit painful, solution. The widespread redundancy programmes we have already seen in the financial services and housebuilding sectors may therefore just be a small sign of things to come.” Malcolm Edge continued: “It is particularly interesting to note that eighty percent of the organisations who took part in our survey were based outside London, signifying that the credit crunch may finally have hit home across the UK regions. There were certainly arguments in some quarters at the beginning of the year that it was primarily the City of London that had been caught in the eye of the storm, and that the rest of the British economy may escape relatively unscathed. However, there’s now no denying that we’re all in this together, possibly for the long haul.” Unsurprisingly, the general mood of British business has significantly darkened over the course of the quarter, with 75% of executives confirming that their organisation has been negatively impacted by the credit crunch. Indeed, only 40% of people surveyed now feel optimistic about their own company’s prospects for the forthcoming year, compared to 60% who were feeling bullish in March. Furthermore, organisations certainly seem resigned to the fact that they could be in the doldrums for some time to come, with 56% expecting the current economic conditions to have a negative impact on UK business for one to two years, with a further 16% thinking that it will be between two and five years before we see an upturn in fortunes.