Staff face axe at over half of companies in UK

Staff face axe at over half of companies in UK

More than half of Britain's employers plan to lay off staff in the coming months, according to a new survey, which underlines fears that a major shakeout in the labour market is looming.

Of more than 200 senior executives from major companies questioned by KPMG, six out of 10 said they were drawing up plans to cut costs, and more than half - 53 per cent - that they were likely to reduce headcount.

With house prices sliding, pushing a growing number of homeowners into negative equity, the performance of the labour market will be crucial in determining how badly the economy fares over the next 12 months. Job losses have so far largely been restricted to the worst-hit sectors, such as financial services and construction, and the claimant count measure of unemployment ticked up by a relatively modest 16,000 in June; but the findings suggest there could soon be more widespread casualties.

In a separate report released today, Roger Bootle, economic adviser to Deloitte and Touche, predicts that interest rates will have to be slashed to 3.5 per cent by the end of next year to tackle rapidly weakening growth, and house prices will fall by up to a third.

However, Bootle did hold out the hope of a healthier economy in the longer term. Sterling has dropped more sharply in the past six months than at any time since Britain's unceremonious exit from the European Exchange Rate Mechanism in 1992, which he said should help manufacturers and exporters to recover.....continued below

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well once the downturn is over.

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