With investment bankers declaring that there is the strongest evidence yet that the economy is in downturn, should recruiters brace themselves for a bumpy ride?

According to a survey by efinancialcareers.com, 41% of bankers in London expect 2008 to be worse for business than 2007. By comparison, only 32% of US bankers predict a deterioration next year.

The latest job market figures in the Report on Jobs also paint a gloomy picture, with recruiters reporting a marked deceleration in the number of permanent placements in November and the rate of inflation for permanent staff salaries hitting a 16-month low.

However, other recruiters say that recession is self-perpetuating and there is no real evidence to support it.

KPMG recruitment director Alan Nolan says the credit crunch is "tightening its grip over the economy" and although the job market remains "broadly robust", the latest job figures suggest an "underlying weakening with both demand for permanent staff and vacancies".

Nolan said there is evidence of a possible slowdown on the cards next year.

Commenting on the Recruitment and Employment Confederation and KPMG jobs report, he said: "Chairmen are keeping a watching brief on the situation. We are not seeing wholesale redundancies but companies are looking at reducing costs and are taking on temporary staff rather than permanent placements because of the uncertainty in the marketplace. There is certainly a slowdown in the commercial and residential housing market, which is a barometer for the economy."

However, Paul Tonks, finance director for construction recruiter Hill McGlynn UK, was far more optimistic.

He told Recruiter: "There is no tangible evidence of any problems. The economy is running along quite happily. Yes, there has been a slowdown but that is affecting retail rather than commercial. So we might have 2% growth instead of 3%; what is the big deal?

"If people talk themselves into a downward spiral, that is where they will go. I am most concerned about the psychological impact of this — talking ourselves into a recession that never needed to happen."

Tonks said the construction industry remained buoyant.

"We have seen a slowing in November and a possible tightening of vacancies, but this is a seasonal industry.

"There is quite a lot of revenue fall-out which suggests a possible tightening, but there are projects there. I am hoping we have a strong January, with the 'new year, new job' resolutions, and really get going in February."