Small business hit hard by spending review

Chancellor George Osborne

Small businesses who supply the public sector will be among the hardest hit by today’s spending review, according to KPMG.

The firm said large suppliers are likely to benefit.

Restructuring specialist Andrew Burn said: “We anticipate that for the small number of big players the overall impact is likely to be positive with a consolidation of contracts and greater outsourcing opportunities. However, this is not to say that margins won’t be under pressure.

“Equally for the smaller businesses either directly or indirectly exposed to the public sector the overall impact is likely to be negative leading to difficult discussions with funders or the need to take swift and aggressive action to reduce overheads.”

This morning it has been reported that up to 500,000 public sector jobs could go as a result of the spending review. The job losses emerged when government papers were photographed while they were being read by Treasury minister Danny Alexander.

Speculation has centered on “back office” staff going in the spending cuts. However, it is not clear which departments these might be in.