UK businesses are expecting lost profits and thousands of job cuts over the next three years, according to a survey by global management consultancy Hay Group and the Centre for Economic and Business Research (CEBR).

The findings suggest that the UK economy will continue another 18 months of slowing growth, which will affect profits to the tune of almost £1bn, and result in an estimated 350,000 job losses.

The repost does say however that the UK will escape a full-blown recession.

Russell Hobby, associate director at Hay Group, commented: “Business leaders see tough times ahead – with falling profits eroded further by rising inflation in the short term. Though the economy looks set to avoid recession, UK plc is facing a long, slow climb out of the current dip.”

Some business leaders forecast that their company profits will dip by 1.3 percent on average over the current financial year, which is a drop equivalent to £900m if applied across the economy. This will be followed by a period of slight recovery as profits look set to grow by 2.7% during 2009/2010. Pay-rises are also expected to fall to 2.9% in 2009/9.

The study also reveals a worrying trend for employees – business leaders expect to slash jobs in 2008/2009 with workforces diminishing by 1.1% on average. The report’s authors estimate 350,000 jobs are on the line.

Workforce levels are not expected to recover until 2009/2010, when they will return to just below current levels.

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