UK businesses facing economic difficulties have been warned not to make redundancies without first considering all the options available to them.

Office accommodation firm MWB Business-Exchange said companies were making obvious cuts, such as reducing headcount, rather than investigating the hidden costs of operations, which could ultimately have a negative and stagnating effect on their business.

David Walker, business development director, said: "Allowing good quality and highly-skilled people to leave will slowly cripple your business and throw a heavy burden on those staff that remain.

"The underlying problem is many businesses do not fully understand their cost base."

Financial experts suggest firms should consider lowering levels of outstanding debt and clearing out old and surplus stock.