Spending cuts to hit growth, warns C&W

The group said non-contracted public sector spending had "slowed significantly" since the emergency Budget last month and would hit trading as a result.

It is ramping up cost cutting plans to help mitigate the impact, but cautioned that earnings growth would be impacted and forecast overall underlying earnings at the lower end of market expectations.

C&W Worldwide will delay recruitment and cut the number of non-payroll staff to save cash.

But costs are also expected to be lower due to a reduction in the amount of money spent on bidding for public sector work, while staff bonus payouts will be reduced if performance is impacted.

C&W Worldwide, which was spun off from the wider international business in March, has a heavy focus on the UK public sector – a division accounting for around 13 per cent of group-wide annual revenues.

Its public sector arm offers telecoms services to central and local government organisations, such as the Ministry of Justice, the NHS and the police service.

The group said the Government's austerity measures would "adversely impact trading" this financial year.

"Nevertheless, we are supportive of the overall approach being adopted by Government and believe that our unique product set provides us with significant opportunity in this area over the medium term," added C&W.