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Services sector will see slow-paced turnaround

BRITAIN’S business services sector has hit the bottom and is tipped to start its recovery around the turn of the year. However, the recovery will be dented by looming public spending cuts, the Centre for Economics and Business Research (CEBR) warns today.

With the public sector making up at least 15 per cent of total demand, business services providers will feel the pinch as the government is forced to rebalance its books and tackle the gaping black hole in the public finances.

Research & development firms, which generate 40 per cent of their revenues from public sector procurement, are likely to be worst hit. Lawyers and solicitors will also feel the impact of the public spending cuts. Business has already been knocked by the slump in financial services, and reduced public spending – which currently accounts for at least a quarter of total custom – will slow the recovery down further.