Page last updated at 01:22 GMT, Saturday, 31 January 2009

Small companies 'shedding staff'

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Job losses at small manufacturers will accelerate, says the CBI

Small and medium-sized manufacturing companies are shedding staff at the fastest rate since the early 1990s, according to new research from the CBI.

Employment, new orders and output all fell sharply in the final three months of 2008 as demand for goods from UK firms fell as the recession took hold.

Thirty-eight per cent of UK firms surveyed cut jobs during the quarter.

According to the CBI, small and medium UK companies are expecting the first quarter of 2009 to be even tougher.

Rapid deterioration

"The jobs picture among smaller manufacturers has deteriorated markedly since last July in the face of rapidly declining demand for UK-made goods at home and abroad," said Russel Griggs, chairman of the CBI's Small and Medium Enterprises (SME) Council.

"Firms are steeling themselves for a very difficult few months with output and orders expected to fall at a record pace in the next quarter.

"As a result, job losses are expected to accelerate among SMEs," he added.

Mr Griggs said that only way to stem the tide of job losses was to make credit more accessible to firms.

Just 7% of the 492 small and medium sized firms surveyed took on more workers during the three months.

Thirteen per cent of companies said that new orders had increased, while 54% said they had fallen.

Seven out of 10 firms said they were working below capacity as a result.

The survey also found that businesses were increasingly concerned about the economic outlook.

Optimism about the business environment fell at its sharpest rate since the survey began in 1987, as did expectations of new orders.

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