Businesses in the private sector could be forced to lose almost half a million workers as a result of the impending £83bn public spending cuts, according to new research.
The report revealed that private sector output could be slashed by £46bn or 2% of the total £83bn due to be curtailed, with the public sector spending cuts having a knock-on effect on the private sector. In parts of the UK, almost one in 20 people could lose their jobs in the next four years as a direct result of the cuts due to be announced by chancellor, George Osborne next week.
However, the PricewaterhouseCoopers (PwC) research found that while private sector jobs are likely to be affected by the spending reductions, it is unlikely to lead the UK economy into to a double-dip recession.
John Hawksworth, chief economist at PwC, said: "Predicted levels of public and private sector job losses will be a drag on the pace of the economic recovery, but should not derail it altogether. While private sector employment may be affected as much as the public sector, this could be mitigated by increased labour market flexibility on wages and hours worked, as we saw in 2008-9 recession.”
The PwC have warned that while growth is fundamental for economic recovery it should be executed with caution.
Jon Sibson, partner and head of public sector at PwC commented: “The ultimate solution to this country’s fiscal imbalances is a robust return to growth but this should not be growth of any kind or at any cost.
“Growth in the UK has been imbalanced for many years across sectors and regions and it would be desirable to correct these imbalances where possible and put more emphasis on financial, social and environmental sustainability.”
© Crimson Business Ltd. 2010