Job Losses

TWO in every five employers plan redundancies over the next three months, according to an influential survey to be published tomorrow. It comes as two leading business groups warn of weak business confidence and a sharp slowdown in growth.

British Retail Consortium (BRC) figures will show, however, that consumers remain resilient in spite of economic worries. The BRC retail sales monitor, in conjunction with KPMG, is set to show total sales last month almost 5% up on a year earlier. Like-for-like sales – adjusted for new floorspace – have risen more than 2%.

Retailers had been very downbeat about prospects for January following a poor December, with like-for-like sales rising only 0.3%. This week’s figures will come as a relief, but the BRC is likely to warn that any strength is likely to be temporary.

This will be the big fear if the warning of many redundancies from the Chartered Institute of Personnel and Development comes true. Its winter labour market outlook, also in conjunction with KPMG, is set to show that 38% of the more than 1,500 employers surveyed plan redundancies over the next three months, with a quarter intending to let go at least 10 employees.

Although it is normal for a proportion of employers to be planning redundancies, the latest figure is sharply up on the 17% number three months ago.

“Employers’ initial reaction to talk of an economic slowdown was to hold fire and take stock of the situation,” said John Philpott, the institute’s chief economist. “But a substantial number now expect to trim their workforces.

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

The British Chambers of Commerce, in its new economic forecast, warns that growth will slow to 1.7% this year from 3.1% in 2007, despite interest-rate cuts. It expects Bank rate to be reduced to 4.75% by the middle of the year.

City analysts will be looking for guidance on this when the Bank publishes its inflation report on Wednesday. It is expected to warn of a slowdown in growth alongside near-term inflationary pressures, and will be taken as reinforcing the Bank’s gradualist approach to cutting interest rates. The report will follow the publication of January inflation figures, set to show an increase in consumer price inflation from 2.1% to 2.3%.

The chambers’ David Kern urged Alistair Darling, the chancellor, not to raise taxes. He said: “If the situation gets worse they should be prepared to break the fiscal rules and, if necessary, cut taxes.”

The Institute of Directors publishes its quarterly business opinion survey this week and warn of a further drop in confidence and a plunge in investment expectations. However, it cautions against excessive pessimism.