Michael Page International, one of Britain’s biggest recruitment consultants, gave warning that annual profits will fall for the first time in five years.

The company said that the erosion of confidence triggered by turmoil in the financial sector was “now more marked and has spread rapidly in November to virtually every industry sector and geographic market in which the group operates”.

It added: “Consequently, the cautionary behaviour of clients and candidates has increased further, significantly reducing activity levels and shortening the group’s earnings visibility.” Michael Page now expects pretax profits for 2008 to be at the bottom end of the range of analysts’ forecasts – £136 million, or 8 per cent lower than last year. Consensus forecasts had been for a modest rise to £150 million.

The company, which draws about two thirds of its profits from outside the UK, also disclosed that it is reducing its staff more quickly than before. In October, it disclosed a reduction in staff, a reflection of trends in fee income, to 5,452. Yesterday, it said that its year-end headcount would be 5,100. Previously, the staff cuts have fallen most heavily in the UK and North America.

Shares in the FTSE 250 company, which earlier this year attracted a bid approach from Adecco, its Swiss rival, fell 11p to 182p. They have fallen by 46 per cent in the past three months. Adecco pitched its initial offer in May at 400p a share.

Kevin Lapwood, a Seymour Pierce analyst, cut his rating on the stock to “hold”, from “buy”, noting that the warning was clearly not good news and that the group’s shares were unlikely to make progress in the short term.

The news came a day after figures from the Recruitment and Employment Confederation showed that permanent and temporary staff appointments fell last month to their weakest level since the start of the survey in October 1997.

Times Recommends

• ‘Lame duck’ fear for FSA as chief quits
• Storm over bailout of EU's most ailing economy
• Northern Rock to drop 100% savings guarantee