Government budget cuts will have negative effect on private sector

The government's proposed £6bn in budget cuts, which includes a civil service recruitment freeze, will have negative knock-on effects on the private sector, leading to rising levels of unemployment, a leading HR body has warned.
 
The Chartered Institute of Personnel and Development (CIPD) believes that the recruitment freeze, which is expected to save £170m, combined with reduced spending in other areas is likely to see public sector employment plummet by 50,000 this financial year.
 
The cuts will, in turn, impact private sector contractors that work for public sector clients, hitting demand for labour in the economy as a whole. As a result, while pruning areas that have "long been ripe for cuts" such as IT and consultancy and reducing spending on training and employment measures that have generated a poor return for taxpayers may appear sensible, the action is coming at the wrong time.