A new report released by the British Chamber of Commerce shows that working Britons are set to encounter yet another difficult financial year in 2010, as many businesses throughout the United Kingdom struggle with the current economic climate.
The most current Monthly Business Survey, undertaken by the Chamber of Commerce, outlines that some 63% of businesses are planning to implement pay cuts or freeze employee’s wages. Moreover, 18% of businesses are contemplating the elimination of certain employee benefits such as gym memberships and bonuses.
Although many experts are now claiming the recession has ended following the fourth quarter of 2009, the fact that many businesses are planning to freeze or in some cases even cut employees’ pay it seem to indicate that many companies do not foresee a significant improvement in the economic conditions in 2010.
Furthermore the survey outlined that the path to economic recovery is very fragile, with 67% of companies polled stating that they would continue to function at their current or reduced levels of capacity for the first quarter of 2010. These statistics seem to indicate that many companies in the UK think that demand for their products as well as the trading environment will continue to be uncertain, and could lead to a tough 2010 for businesses.
Meanwhile, whilst the Chamber of Commerce believes that British employees will be experiencing pay cuts or freezes in 2010, a report issued by the Office of National Statistics at the end of December indicated that British workers are in fact experiencing the biggest fall in pay over 50 years.
Pay fell by 1.3% during the period of July to September 2009, when compared with the same period the previous year. The Office of National Statistics claims that this is the biggest annual decrease since they first began gathering and recording the data in 1955. Throughout the third quarter of 2008 British received a combined income of £163.7 billion; however this figure fell to £161.6 billion in the third quarter of 2009.
Despite the decrease in the amount of money paid to workers, British households have managed to save the greatest amount on record with a total £21.4 billion held in both bank accounts and investment plans during the period between July and September of 2009. This is compared with the £2.2 billion saved during the same time period in 2008.
The notable increase in the level of spending amongst the British people highlights that Britons are in fact spending significantly less which is failing to aide economic growth. It is thought apprehension over unemployment confounded with potential tax increases in the future has lead to many households contracting their levels of spending and paying back their debts in the third quarter.
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