SME job losses accelerate, but car firm bail-out could put brakes on

Small businesses are shedding staff at the fastest rate since the early 1990s, according to the CBI.

The business group’s latest quarterly SME Trends survey of small and medium-sized enterprises, out today found demand for UK-made goods has continued to fall rapidly in the deepening recession.

In the three months to January, the volume of total new orders and output among manufacturing SMEs fell at their fastest rate for nearly two decades, and firms expect the next quarter to be even tougher.

Russel Griggs, chairman of the CBI’s SME Council, said: “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.

“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.”

However, Griggs pointed out the survey closed before the government’s latest measures to kick-start the economy were announced, including a further £50bn to rescue ailing firms.

Earlier this week business secretary Lord Peter Mandelson pledged £2.3bn of loans to the car manufacturing industry, which includes smaller companies that make car components.

Just 7% of the 492 firms surveyed between December and January by the CBI expanded their workforce during the quarter, while 38% reduced their headcount. The resulting balance of -31% represents the steepest quarterly fall in employment since January 1992.

The volume of total new orders during the quarter slumped at its fastest rate since July 1991, with 13% reporting an increase and 54% a fall, giving a balance of -41%.

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