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Profits down but big five warned against further job cuts

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7th Jan 2009
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The new year did not bring good news for Grant Thornton, which has become the first major UK accounting firm to announce a drop in profits for 2008. Recent figures released showed pre-tax profits down 5% to £72m for the financial year ending in June 2008.

The firm’s new CEO Scott Barnes admitted in a statement that the economic downturn would make its aim of pulling in £500m in fee income in 2010 ‘very tough’.

At the end of last year the company announced plans to trim down its workforce by around 5%, cutting 225 jobs in anticipation of a slowdown in growth this year. Although the economic outlook for 2009 remains uncertain, industry observers advise that further job cuts could have a detrimental effect on business.

Recent figures released by Manpower Professional revealed that only 6% of companies in the business and financial sector plan to hire new employees in Q1, while 10% admitted to planning staff cuts which would create a net employment outlook of -4%.

Adam Leon, chief operating officer at Manpower Professional advises that while job cuts may seem like a good cost-saving solution now, companies may regret it in the long run: “There is a balance between reducing costs and shooting your business in the foot”.

Leon notes that while temporary and fixed-term contracts will become more popular in the coming months as more and more jobseekers grow increasingly flexible, a skills shortage prompted by reduced numbers of trainees will soon follow. “The impact will really be felt in three to five years’ time, specifically in the accounting sector, as fewer accountants qualify, by which point the market may start to pick up”.

Good news for some

Despite the current doom and gloom, there is a silver lining for credit control/cashflow personnel, according to Leon: “As opportunities to raise funds from traditional sources dry up, keeping on top of credit control and cashflow issues will be key, so staff in this area will certainly be in demand over the coming months”.

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