British faces a million job losses from spending cuts: study

13th October 2010, Comments 0 comments

A million people, half of them in the private sector, could lose their jobs in Britain as a result of biting government spending cuts, a report published Wednesday said.

Professional services firm PricewaterhouseCoopers (PwC) said private sector firms -- particularly in areas like construction and defence -- would be hit hard by falling demand for their services from the public sector.

It said gross output from the private sector could fall by some 46 billion pounds (52 billion euros, 73 billion dollars) per year by 2014/15.

At the same time, the study concluded that the cuts were unlikely to tip Britain into a double-dip recession, as some commentators have predicted.

The PwC report comes a week before Prime Minister David Cameron's coalition government unveils its long-threatened plans for spending cuts of 25 percent in most departments as it battles to reduce a record public deficit.

It also coincided with latest official figures showing that Britain's unemployment rate fell very slightly to 7.7 percent in the three months to the end of August. There are currently 2.45 million unemployed.

PwC chief economist John Hawksworth said that even though the job losses would be serious, they would probably not be bad enough to hit Britain's recovery from recession, which began at the end of last year.

Overall, 3.4 percent of jobs could be lost in the public and private sectors as a result of the cuts, the PwC report said -- equivalent of roughly 943,000 positions.

"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," said Hawksworth.

"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 the 2008-09 recession."

© 2010 AFP

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