Smaller engineering firms 'are shedding staff'

Survey shows job cuts among small manufacturers as downturn hits local firms

Smaller manufacturers are cutting staff for the first time in 18 months as demand for UK-made goods at home and abroad weakens in the global economic slowdown, a survey reveals.

The CBI’s latest quarterly SME Trends survey found that 17 per cent of small- and medium-sized businesses had expanded their workforce in the last three months, while 29 per cent had reduced the numbers.

The resulting balance of minus 13 per cent represents the biggest quarterly fall in employment since October 2003, down from July’s figure of plus 6 per cent.

Job prospects are expected to worsen in the next quarter, with a balance of 27 per cent of firms saying they will reduce their headcounts further.

Six per cent of firms said access to credit or finance was likely to limit output in the coming quarter, and one in ten said it was likely to limit export orders. A third of businesses surveyed said political and economic conditions abroad would limit export orders – the highest figure since April 2003.

Russel Griggs, chairman of the CBI’s SME Council said: “It is worrying that more SMEs are finding a lack of credit affecting business decisions. But the bold rate cuts of recent weeks and measures to support SMEs should help prevent a further credit squeeze but the impact is unlikely to be immediate.”

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