Hays profits crash 97% on hiring freeze

Recruitment firm Hays' profits disintegrated today as the squeeze in the public sector offset a "fragile" improvement in the City.

Profits tumbled 97% from £100.8 million in the first half last year to just £3.4 million this time after "a significant reduction in demand" for new staff.

Hays shares dived 7% or 8p to 105.3p making it the biggest faller in the FTSE 250.

Chief executive Alistair Cox said improvements in Asia, Australia, Brazil and Germany were not mirrored in the UK where fees from placing workers dropped 37% to £121.5 million.

"We expect our performance in the UK in the second half to be broadly similar to the first," said Cox, who has axed 800 of his owns staff in the UK since the start of the recession.

He said banks and accountancy firms were hiring again but that demand "continued to be fragile" because of concerns about the economy.

"The City has started to move again but what is holding back the overall market in the UK is the decline in the public sector.

"Councils and government departments have not started getting rid of people yet but they are not replacing them when they leave."