Just as Balfour Beatty warned all of its 12,000 UK construction services staff of possible redundancies today, the OECD forecast that the UK had moved back into recession.
With new infrastructure projects expected to fall sharply after the Olympic Games in London this summer, the building giant, which employ 50,000 people worldwide, said it was undertaking a formal consultation process on its restructuring plans.
The aim of the move was to discuss ways of aligning “the resources of Balfour Beatty’s Construction Services UK business to current and future market conditions”, it said.
Reports suggested that the FTSE 250 company could be looking to make savings of up to £50 million per annum. Although it “currently envisaged” that two thirds of its staff working on long-term infrastructure projects such as Cross Rail would be unaffected by its change proposals, that still leaves 4,000 who could be.
While Balfour Beatty has refused to confirm figures and said that no jobs had been put at risk so far, some reports indicated that redundancies could affect as many as 1,200 workers.
At the same time, however, the Organisation for Economic Cooperation and Development forecast that the UK economy will have contracted during the first three months of 2012, taking the country back into recession.
It is predicting an annualised drop in GDP of 0.4% in the first quarter, which would suggest a contraction of 0.1% compared with the final quarter of 2011.
According to the OECD, the country also saw output decline by 1.2% in the final three months of last year, with two quarters of economic contraction being the official definition of recession. The forecast is in contrast to that of the Office for Budget Responsibility, which said that it expects to see growth in the first three months of this year.
But the UK economy has been alternating between quarters of growth and contraction since the middle of 2010, a situation that the governor of the Bank of England, Sir Mervyn King, expects to continue over the year ahead.
