FIRMS will emerge from the recession with a smaller core workforce but more staff on "flexi" arrangements, a leading business group predicted today.

The CBI said a more flexible workforce was one of a number of areas where "fresh approaches" will develop because of the economic downturn.

More financing options will be developed, firms will seek to improve "corporate citizenship" to help attract and keep customers and staff, and companies will re-examine their relationship with suppliers and other organisations such as universities, according to the CBI.

Director general Richard Lambert said: "We may be at the start of a new era for businesses, in which attitudes to finance and to corporate leadership are changed for a generation by the shock of the past two years.

"What we now need is a more balanced, less risky pathway to growth, one in which the short-term returns may be lower, but the long-term rewards for management success will be a lot more sustainable and secure.

"Firms looking to reduce risk and acknowledge their interdependence are seeking more collaborative ways of working through partnerships and joint ventures. Perhaps we will see a flourishing of supply chain finance - in which firms with the largest, most solid balance sheets help finance their smaller suppliers or customers."

The report was published ahead of today’s CBI annual conference in London.

Mr Lambert told BBC Radio 4’s Today programme: "We are moving into a different sort of era, I think a better era than the last 10 years, which has been one of unsustainable growth.

"Growth may be a bit slower, funding may be a bit more expensive, but we think it will be more stable and less volatile.

"We think the economy is stabilising now after this recession, and that things are beginning to look just a tiny little bit better out there."

He added: "I think we need a more balanced economy. Over the last 10 years, our economy has been driven by government spending and consumer spending, both of them fuelled by debt. That game is over now.

"What we need to get employment now is more investment from the private sector, better trade conditions and more trade.

"That will be a more balanced way of developing our economy in a more stable way moving forward."