Our latest survey reveals that nearly half of PR agencies that operate in the public sector have lost clients due to public sector cuts. I guess this is not exactly unexpected. The PR industry was never going to be immune to the impact of public sector cuts following the bail out of the banking sector and a hard recession – but the cold statistics show it's now a reality rather than a fear. Of the 100 agencies surveyed, 47 per cent had lost clients as a result of the cuts. Of those who had kept their public sector work, 85 per cent said budgets were being slashed.

The government axe is likely to have a major impact on the PR industry. More than half of agencies with public sector clients rely on the sector for over 30 per cent of their business. The impact of recent and future spending cuts cannot be underestimated. The Prime Minister, in his speech at the Conservative Party Conference warned: “Reducing spending will be difficult. There are programmes that will be cut. There are jobs that will be lost.”

David Cameron’s statement justifies one of our key findings from the survey – that 68 per cent of PR agencies are not confident in keeping their public sector clients in the face of future cuts.

We may be in a fragile recovery but the road remains rocky for the future of public sector PR as government department budgets will be cut on average by 25 per cent. We have already seen the speed at which the coalition government is prepared to act with the axing of the Change4Life campaign, so we must be prepared for tougher times ahead.

Testing economic times often bring out the best in people though – and this will be especially true in a creative industry such as PR. New ways of working efficiently will be developed and innovation will be how the PR industry best protects itself against the cuts. There will be a great deal of pain as we enter this ‘age of austerity’ and the primary aim for the PR industry will be damage limitation to its bottom line.

I hope those PR agencies that are particularly exposed are successful in finding new revenue elsewhere, though I expect few will be able to avoid cost cuts of their own.

Daryl Willcox is chairman and founder of Daryl Willcox Publishing