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275,000 Jobs To Be Lost Across Business Services Sector

275,000 Jobs To Be Lost Across Business Services Sector

The business services sector will feel the full force of the recession over 2009 and 2010, with virtually all aspects of the sector set to see sharp reductions in output and employment. Advertising, real estate and research and development to be worst hit says leading economics consultancyBusiness services jobs will decline by 169,000 in 2009 from 2008 levels, and a further 106,000 will be lost in 2010 as a result of the recession. Those sectors that rely on the investment cycle, discretionary budgets and the property market will be worst hit.This is one of the findings of the latest Business services prospects report, a six monthly publication released by the centre for economics and business research (cebr) one of the countrys leading economics consultancies and respected commentators on business trends.The business services sector has been incredibly important to the UK economy over the past ten years, contributing around one-third of all new jobs created and and five per cent per year GDP growth since New Labour came to power in 1997. We anticipate that employment in the sector will fall by seven percent from its peak in 2007 to the bottom of the cycle in 2010, and that output will fall by over 3.5 per cent in 2009.According to the authors, the worst hit sectors will be real estate activities, research and development and advertising. Jobs in the real estate sector are set to fall by over 45,000 up to 2010, 18 per cent below their peak in 2007, as the lack of activity in the housing market persists through 2009.Research and development is in for a horrendous 2009 as the collapse in investment continues due to many firms putting off investment decisions and waiting for fire sale prices, as well as ongoing credit rationing. Employment in the sector is predicted to fall by 12 per cent by 2011.The advertising sector, already suffering from substantially reduced yields, will see a huge shake-out as firms discretionary budgets are squeezed further during 2009 and 2010. Employment will fall by 17 per cent up to 2010 bringing employment in the sector back to 1995 levels.Jrg Radeke, one of the reports authors commented:The business services sector is set to have its biggest shake-out for decades. With discretionary budgets slashed, investment collapsing and the housing market remaining in the doldrums, it is difficult to see where any growth is going to come from.Ben Read, a managing economist at cebr, added: The business services sector has been one of UK plcs leading lights, contributing substantial growth since New Labour came to power. Unfortunately, this is now coming to an abrupt end, as the markets served by the business services sector collapse. Most worrying for the medium-term prospects for the UK is the disintegration of investment which drives our predictions for the Research and Development sector, and is one of the key reasons why The Treasurys forecasts for a return to trend growth from 2010 will prove to be wildly optimistic.

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