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Spending cuts could be boon to private sector

Looming spending cuts in the public sector could be a “private sector opportunity”, an economic think tank said this week.

The Centre for Economics and Business Research (CEBR) said private firms had the chance to show they could make public sector savings without hitting services.

CEBR chief executive Douglas McWilliams said many private suppliers to the public sector faced lower spending levels.

But he added: “It is quite possible that public sector cuts are a private sector opportunity.

“What would be dangerous would be if the public sector tried to protect its own when making economies by cutting back on the external spend disproportionately to save public sector jobs.

“This would risk making the impact of the cuts on the services provided to the public much more severe than is necessary.”

The CEBR said cutbacks were a “certainty” whoever wins the election.

The think tank expects £60 billion in cuts and £40 billion in tax hikes from Labour and £80 billion in cuts and £20 billion in tax rises from an incoming Conservative administration.

According to the CEBR, public sector pay, jobs and pensions will be first in the firing line, but businesses with a high dependency on the public sector will also come under pressure.

Major spending areas such as health, drugs and education services aside, 16% of computer and office machinery sales are made to the public sector as well as 15% of legal services, the body added.

This was posted in Bdaily's Members' News section by Ruth Mitchell .