Debt worries may remain despite jobs boost

The private sector is set to go on creating new jobs over the coming months, a survey has revealed.

But the good news from the Confederation of British Industry (CBI) on recruitment expectations may not mean workers can stay debt free as pay rates are expected to stay low.

The study by the CBI and recruitment specialists Harvey Nash has found that 47 per cent of firms think they will increase the size of their workforces in the next 12 months, whereas only 19 per cent expect a reduction.

And this positive balance of 28 per cent increases to 35 per cent for firms with fewer than 250 employees – suggesting small and medium enterprises are leading growth.

However, employees facing debt problems may still struggle with rising prices, as around half either plan pay rises below the present rate of inflation or targeted rises – meaning some will get less than others.

Furthermore, the good news may not last, CBI deputy director-general, Dr Neil Bentley warned.

He stated: "Employers are making hiring plans on shifting sands and there is a risk the tentative private sector jobs recovery could be blown off course by fast-moving economic events at home and abroad."

The squeeze on incomes has led to a growing number of consumers looking to repair broken items at home instead of shelling out for replacements, according to a study this month by insurance firm Swiftcover.com.

It revealed 15 per cent of the population try to mend broken items, including ten per cent who would try to fix crockery themselves when they would not have done so before the financial crisis.

By Joe White