As Summer gives way to Autumn, in engineering companies up and down the Country, the ritual annual budget planning activity is well underway. Engineering Manager looks at the number of projects being requested and tries to reconcile with the number of heads in his department - knowing full well that he will be expected in 2010 to do even more, with less.

Chief Economist at KPMG, said recently, “Despite the recent flurry of more upbeat economic news, many firms still lack confidence in the recovery and continue to expect tough times ahead.”

“Most striking is the large number of firms planning to defer or cancel pay reviews. This conservative approach indicates that business remains unconvinced that current economic green shoots will lead to sustainable healthy growth in the near term,” he said. Average pay increase expectations have dropped below the rate of inflation to 1.7 per cent.

According to the CIPD, unemployment is is still on course to top 3 million in 2010. And it is far too soon to rule out another avalanche of redundancies later in the year as companies struggle to balance their year-end books.

Purple Squirrel can see that in some specialised engineering niches, there is a hiring demand. It will be interesting to see into 2010 whether employees become disgruntled with minimal payrises and more inclined to make the leap into anew company.

skills are in demand, for now at least, cautious budget plans seem to be the way ahead.