Most firms plan to cut or freeze salaries

More than half of British companies plan to freeze or cut their employees' pay in 2011, according to a survey by the British Chambers of Commerce.

Of the 450 businesses surveyed, 45 per cent said they would give their staff a pay rise, while 49 per cent intended to freeze salaries and 6 per cent said they planned to reduce wages.

The BCC said the results showed that companies were taking a "pragmatic" approach to challenging financial conditions, and that some were choosing to cut pay as an alternative to making staff redundant.

Firms taking part were also asked about the impact of government spending cuts on their businesses. Thirty-eight per cent said the cuts would have an impact on their profitability, and 18 per cent said they would delay investment plans as a result, but only 13 per cent expected to lay off workers as a result.