Small firm jobs hit by orders slump

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The CBI said employment, new orders and output among manufacturers in the three months to January all fell at the fastest rate since the early 1990s as demand for UK-made goods continued to slump.

Small and medium sized firms (SMEs) expected the next quarter to be even tougher, according to the poll of almost 500 companies.

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.

"This survey closed before the Government's measures to kick-start lending across the economy were announced and we hope these will soon begin to make it easier for firms struggling to access the credit they need to go about their day-to-day business.

"Only the availability of credit will help stem the tide of job losses."

Just 7% of firms surveyed expanded their workforce during the latest quarter, while 38% reduced their headcount.

The resulting balance of minus 31% represented the steepest quarterly fall in employment since January 1992.

A Business Department spokesman said: "We appreciate the very serious difficulties that small and medium businesses are facing. We are providing real help including working capital and loan guarantees securing more than £20 billion in bank lending, helping businesses manage their tax bills and action to encourage the prompt payment of bills. We will continue to do all we can to help employers survive the downturn, retain staff and emerge from it stronger."