Small businesses are cutting jobs at the fastest rate in nearly 20 years – and there are predictions the situation is going to get worse.
Nearly 40% of businesses polled made their workforce smaller in the last quarter

Employment, new orders and output fell at a pace not seen since the early 1990s, according to a CBI poll.

The Conferation of British Industry asked 500 small and medium-sized firms about the three months to January.

The firms predicted the next quarter will be worse still, as demand for UK-made goods continues to slump.

Just 7% expanded the size of their business in the last three months, compared with 38% who made their workforce smaller.

This is the steepest three-month drop in employment since January 1992.

Russel Griggs, chairman of the CBI’s SME council said job losses were likely to accelerate.

“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,” he said.

The poll was conducted before the Government announced measures to kick-start lending, and these may help boost businesses, he said.

“Only the availability of credit will help stem the tide of job losses,” he added.

Earlier this month the Government unveiled a package of measures to help increase lending to businesses.

They are encouraging banks to lend more by guaranteeing the loans.

“Some companies are struggling to secure the finance they need, not because of any failure in their business, but due to tougher credit conditions,” Business Secretary Lord Mandelson said.

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