Private sector jobs to be hit by public sector spending cuts, but no double dip 

Almost half a million private sector jobs could be lost as a result of the impending public sector cuts, but it will not cause a double-dip recession, claims PricewaterhouseCooper (PwC).

Almost half a million private sector jobs could be lost as a result of the impending public sector cuts, but it will not cause a double-dip recession, claims PricewaterhouseCooper (PwC).
A new report, Sectoral and regional impact of the fiscal squeeze, published by PwC, claims public sector output could be reduced by about £46 billion per year by 2015/15.
The study claims nearly one million people could face unemployment due to public sector cuts.
But the report highlights the potential for job creation in the private sector resulting from more employment opportunities coming from increased activity in areas such as the outsourcing market and interest rates staying lower for longer due to the fiscal consolidation.
John Hawksworth, chief economist at PwC, said: ”Predicted levels of public and private sector job losses will be a drag on the pace of the economic recovery, but should not derail it altogether.
”While private sector employment may be affected as much as the public sector, this could be mitigated by increased labour market flexibility on wages and hours worked, as we saw i the 200809 recession.  Evidence from the 1993-99 fiscal consolidation showed a net rise of around 1.2 million in private sector employment during those years.
”Although the recovery may not be as strong this time as in the 1990s, we would expect at least some rise in private sector employment over the next five years despite the fiscal squeeze, bearing in mind that this squeeze should allow interest rates to remain lower for longer.”





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