Pay freeze at Freshfieds

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Freshfields Bruckhaus Deringer, the third largest law firm in the City, also said that salaries for newly qualified solicitors would be cut from £66,000 to £59,000. It is believed to represent the largest pay cut at a senior British law firm in decades.

Mr Tim Jones, London managing partner of the law firm, said spending on conferences and travel would also be cut. Scott Gibson, of recruitment agency Hughes-Castell, said: "It's a brave move to be the first firm to announce this. It shows how serious this market is."

Freshfields also said it would not rule out redundancies later this year.