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Business in recession still bad – but worsening slower

This is as good as it gets in the recession for business – unemployment is worsening but more slowly, while businesses are finding borrowing money a little easier, say two key reports.

Fewer employers are expecting to make redundancies – with the average expectation that 900 companies polled by the quarterly Labour Market Outlook, 4% axe workers – compared with 6.5% last quarter. Although fewer jobs may go – about 15% of the firms are cancelling pay reviews, says the survey jointly carried out by the Chartered Institute of Personnel Development and accountants KPMG.

CIPD chief economist Dr John Philpott said: "The best that can be said is that things are getting worse more slowly. Unemployment is still on course to top three million in 2010, and it is far too soon to rule out another avalanche of private sector redundancies later in the year. 

"While pay restraint or cuts in hours of work has helped save many jobs that might otherwise have been lost during the recession, holding onto staff when order books are far from healthy pushes up unit labour costs and eats into company profits." 

Meanwhile, a CBI survey reveals that firms in general, feel the banks are easing credit restrictions. About 27% said credit was improving, while 10% were still finding borrowing hard. The balance of 18% is the first improvement in credit supply since the survey began in January

The Access to Finance Survey showed credit costs are rising but businesses are finding borrowing easier to come by for the first time this year.

CBI director-general Richard Lambert said: "Credit availability had been getting more difficult for many months, so today's results are positive news. The improvement in access to new credit will help many businesses struggling with the recession, and it is encouraging that its supply is expected to improve in the months ahead.

"Smaller and medium sized businesses are still facing challenging credit conditions and have fewer funding options open to them than big companies. We hope that over time their credit supply will improve."


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