The Confederation of British Industry (CBI) has warned UK businesses to expect continued pay freezes and redundancies in the new year as the economy begins to recover from the recession.
According to the group, this recovery process is likely to be “fragile” and unemployment levels have yet to peak, reaching what is believed to be their height next autumn.
Furthermore, employers are expected to avoid pay rises or bonuses as they look to manage their costs, with interest rates expected to continue to climb until next year.
However, the CBI announced it believes the economy will have emerged from recession by the end of 2009.
John Cridland, CBI deputy director-general, said: “In the spring many staff will face another cycle of wage freezes and job losses will continue rising until the autumn.”
He added that the UK needs to “keep our nerve” as it emerged from recession.
A recent Lloyds TSB Business in Britain survey revealed that 21 per cent of firms now predict an upturn in their sales over the next six months.