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Job cuts and pay freezes ahead

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The survey of 500 privately held businesses shows that nearly half (49 per cent) plan on cutting staff and freezing pay over the next 12 months.

Grant Thornton’s International Business Report says this will particularly affect family, entrepreneurial and SME firms in the South West, West and Wales, where 62.5 per cent expect to reduce headcount, in sharp contrast to the 27 per cent reporting cuts the year before.

“The significant jump in the number of businesses that have reduced their headcount is very concerning, particularly if the trend continues,” comments David Campbell, regional managing partner at Grant Thornton.

“It’s still really tough out there for private companies in the UK, with many facing severe financial pressures, forcing them to reduce headcount to stay afloat.”

Small firms in London and the South are slightly more positive, with 52.9 per cent planning on reducing staff numbers.

Additionally, over the next year, 44 per cent of British firms plan on freezing pay, while 39 per cent plan to increase salaries in line with inflation.

These statistics are pretty worrying, as a reduced headcount will have a knock-on effect on household incomes, thus slowing Britain’s economic recovery. Do these findings fall in line with what your plans? Are you cutting jobs?

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