Effects of fiscal tightening underestimated, says CIPD

The government has underestimated the impact of its austerity measures, according to a source from the Chartered Institute of Personnel and Development (CIPD).

John Philpott, chief economic adviser for the organisation, predicted that the state's forecast of 490,000 job losses in the public sector looks like it may fall short of the actual figure.

In his opinion, not enough allowance has been made for the "negative indirect demand effects" on businesses.

"The full impact of the coalition government's planned fiscal tightening has been understated following publication of the comprehensive spending review (CSR)," he said.

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According to the CIPD, there are likely to be around 1.6 million job losses across the public and private sectors as a result of the CSR and the impending VAT increase.

Recently, director of HR research and consultancy at the Institute of Employment Studies Peter Reilly suggested some public sector staff may want to leave their positions to pursue a new career or start their own business.