RECRUITMENT firm Hays reported a sharp drop in UK profits following a slump in public sector business and a squeeze on City hirings.

The group’s operating profits for UK and Ireland fell by 68% to £3.6m in the year to June 30, although this was offset by “exceptional” net fees growth of 51% in Asia and record growth in other overseas offices.

Overall, pre-tax profits before exceptional items rose by 50% in the period to £106.6m.

UK and Ireland net fees were down by 1%, driven by a 35% decrease in public sector work as austerity measures continue to have an impact.