One in three UK firms are maintaining staff levels higher than needed to avoid losing skills, but they will be forced to make job cuts if economic growth does not return soon, finds research from the Chartered Institute of Personnel and Development (CIPD).

Confidence for a return to growth among UK businesses is far from strong, a survey from accountancy firm BDO reveals. Its Business Trends report shows UK business confidence in July falling to its lowest point this year, 93.1% – below the 95% mark it claims indicates growth.

The CIPD’s survey of over 1,000 employers, conducted by YouGov, finds an overall balance of +5% of companies looking to increase staff count in Q3, with optimism higher among small and medium-sized enterprises (+46%) and low in the public sector (-36%).

Calling the labour market “gravity defying”, the CIPD notes that just under one in three (31%) of private sector firms have maintained staffing levels above what they actually require, with 62% of all private companies saying they will be forced to make job cuts if output or service delivery does not increase next year.

CIPD labour market adviser Gerwyn Davies says: “The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies.

 “The labour market is approaching a game-changing phase – one that could shape Britain’s capacity to compete for a generation.”

The Office for National Statistics will be releasing its labour market statistics this Wednesday, 15 August.