IT contractors will be feeling the effect of public sector cuts for at least the next two years, it has been claimed.

Stephen Overell, associate director of the Work Foundation, claims that the private sector is not in a position to absorb the job losses that are being predicted in public organisations.

In addition, the areas likely to be most affected by the cuts are the ones struggling most with unemployment.

Mr Overell expects the effects to be seen almost as soon as the Comprehensive Spending Review is published this autumn, as some companies are already losing staff in anticipation.

"It is quite true that we don't really know exactly where the cuts will fall yet, but there are lots of employers that have been cutting staff even before they know exactly where the cuts will fall," he said.

According to figures by the Office for National Statistics, the employment rate for those aged from 16 to 64 for the three months to June 2010 was 70.5 per cent, up 0.3 per cent on the last quarter.