The business services sector will suffer dearly from the recession; more than half of the jobs it gained during the last five years will be lost over the next five years. Among all of the subcategories, advertising is set to be the worst hit, according to a new report from the Centre for Cconomics and Business Research (CEBR)

Business services jobs increased by 616,000 from 2003 levels to 2008 levels. However, there will be 311,000 fewer business services jobs in 2013 compared to 2008. Those sectors that rely on the investment cycle, discretionary budgets and public sector spending will suffer the most.

The business services sector has been one of the strongest performing components of the UK economy during the recent expansion. Indeed, this sector alone contributed around one third of all new jobs created and five per cent per year GDP growth since New Labour came to power in 1997. But the credit crunch and current recession have brought a reversal to that trend.

The report anticipates that employment in the sector will be eight per cent lower in 2013 compared to the peak in 2008. Meanwhile, output in the sector will fall dramatically – by over five per cent in 2009 – before sluggishly recovering and not even reaching its 2008 peak by 2013.

According to the authors, the worst hit sector will be advertising. As noted by the Advertising Association, this sector was already losing revenues last year: revenues in 2008 were down by 3.9 per cent year on year compared with a 4.6 per cent increase in

And that trend is set to continue as both recruitment and display advertising are reeling from the effects of the recession. As a result, 15,000 advertising jobs will be cut over the period from 2008 to 2013.

The recent and continued deterioration of public finances is also going to have a significant effect on the business services sector. As one of the biggest sources of demand for business services, public sector spending contributes a significant portion of revenues for the business services sector. With public sector expenditure set for cutbacks from 2010 onwards, the prospects for business services necessarily diminish as well.

Arek Ohanissian, one of the report’s authors, commented: ‘Though most sectors in the UK economy will suffer from the recession, the dramatic reversal of fortunes for the business services sector from strong performance to significant losses would have been hard to imagine even at the onset of the financial crisis.’

The report did hold some positive predictions however. The IT services sector was predicted to return to growth following a brief dip in 2010, growing beyond pre-recession levels again by 2013.