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Falling business confidence to blame for staff layoffs

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Redundancies which continue to plight workers up and down the country can be traced back to a loss in business confidence among management, the Federation of Small Businesses (FSB) has claimed.

The FSB’s quarterly “Voice of small business” survey found that 5.8% of small businesses are in a firing rather than hiring mode for the next quarter at least. By contrast, just 0.5% are leaning towards recruiting new employees. The news comes as figures showed that unemployment had risen to 2.57 million, with almost a million people aged under 24 out of work.

“Whereas the private sector overall has been creating jobs, small firms appear to have been shedding staff,” said Charles Davis, managing economist at the Centre for Economics and Business Research (CERB), for whom the research was conducted. “At a time when the government is also cutting back employment, this raises worries about a significant increase in unemployment, which has already been rising.”

As such, the FSB is calling on the government to consider a national insurance contributions holiday for small firms. The break would allow struggling businesses to cope with rising costs, while a targeted cut in VAT could also encourage more consumer spending.

“As businesses come to terms with the double whammy of falling revenues and rising costs, it is no wonder that they’re losing confidence and, unfortunately, as their overheads increase, one way to control it is to lay off staff,” said John Walker, FSB National Chairman.

“This is the first time that we have seen confidence in all regions of the UK in negative territory,” he added. “We urge the Chancellor to look closely at our national insurance contributions holiday proposals and bring this forward in his autumn statement. We fear that without it, the recovery will falter once more.”

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Written by Andrew Hodges

October 24, 2011 at 1:27 pm

Posted in Comment, LinkedIn

Tagged with ,

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