Hundreds face the axe as economic crisis begins to bite

Firms across the UK are planning to slash hundreds of jobs in one of the first clear signs that the profession is bracing itself for falling revenues in 2009.

But a recruitment expert has warned that slashing jobs could backfire on firms. He said the firms that cut too many jobs risk being understaffed for a couple of years when the economy recovers.

Grant Thornton last week said up to 225 of its staff could be sacked, including more than 40 partners, blaming an expected fall in fee income for next year. And other leading firms have said they are making similar moves. A source close to PricewaterhouseCoopers, for example, said the firm plans to cut at least 100 jobs across most service lines by offering staff voluntary redundancies.

A PwC spokeswoman said: ‘From time to time we offer voluntary severance terms such as this. Despite difficult economic conditions, however, we are continuing to invest and recruit in growth areas and take long-term investment decisions for the benefit of our clients, our people and our business.’

Deloitte, which posted £2bn in annual UK revenues, is also planning job cuts but refused to say how many. A spokesman said: ‘We have offered voluntary [redundancy] options to leave with generous packages to some staff in selected business areas. This has primarily resulted from reduced attrition rates and build up of numbers to levels inconsistent with business volumes.’

A spokesman for KPMG, which cut 90 jobs in its corporate finance division in May, said this week: ‘Like any business, we have to link our staffing levels to business requirements and economic conditions. This is being kept under constant review, though there are currently no plans to actively reduce headcount. We also continue to recruit in key business areas where there is a strategic or business need.’

Ernst & Young said: ‘As with all well-managed organisations, Ernst & Young continually reviews its business and staffing structures. We continue to recruit across the firm.’

Phil Shohet of Kato Consultancy, advisers specialising in the accountancy profession, voiced concerns about mass job cuts: ‘I hope they don’t get rid of lots of managers like they did in the last downturn. The larger firms sacked lots of people in corporate finance and then took two to three years to build it up again.’

Grant Thornton said it will try to redeploy staff affected by any job cuts.