The looming public spending cuts in the U.K. could threaten the labor market recovery as the private sector struggles to keep pace with government layoffs, according to Financial Times. On Monday, a survey from the Chartered Institute of Personnel and Development and KPMG showed that private manufacturing and services sectors will create the bulk of new jobs in the first quarter of 2011. However, the groups report that public sector job cuts are increasing, with a large majority of public organizations and authorities planning to cut redundant jobs in the first quarter. Such redundancy programs are expected to shed on average 13% of payrolls.

Meanwhile, the Centre for Economics and Business Research reported that home prices in the U.K. will drop 1.7% in 2011 to an average of £175,416, reversing a previous forecast for a 2.2% gain this year, adds Bloomberg. The report cited concerns of household incomes and tight lending at banks for the gloomy forecast for the housing market. According to The Daily Telegraph, the services sector is also bracing for tougher times, with the BDO index of the services optimism falling to 92 in January from 94.8 the previous month, and the group warned, “There remains a real risk that the U.K. could enter a technical recession.”

Click here to read the story on the labor market from Financial Times.

Click here for coverage of the housing market from Bloomberg News.

Click here for the article on the service sector from The Daily Telegraph.