Almost 60% of firms are planning to cut or freeze pay, according to the CBI, while a similar number have put recruitment on hold.

But industry bosses added that companies and workers are co-operating in an unprecedented way to ride the recession, with staff accepting flexible working practices to avoid job cuts.

As a result, firms were taking a more measured approach to restructuring and redundancies, says the CBI in its Work Patterns in the Recession survey, prepared in association with recruitment consultants Harvey Nash.new