Businesses 'may have to cut back on employees'

Small businesses are being forced to cut back on staff hours as a result of the economic downturn, it has been suggested.

The Federation of Small Businesses (FSB) has observed that companies are attempting to retain staff by reducing times and therefore paying out less.

But spokesman for the organisation Stephen Alambritis explained that unless more finance is made available for small firms, jobs will be lost.

"The next stage, if it's still difficult, will be shedding labour. That will be when the recession will become deep," he said.

And he called for the Bank of England to make a full one per cent cut in interest rates this week, as despite many small businesses having money set aside a lack of finance will reduce confidence.

In a recent FSB poll of its members, a fifth of respondents said they had been forced to reduce employee numbers due to the financial crisis, while another third reported that they are considering it.

Published on: November 5, 2008

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