Cutting back on training and staff development is a false economy that will cost businesses dear, senior executives and HR directors from leading businesses have warned.

The warning came at an event organised by international leadership development organisation Common Purpose and followed a study by the same company which found that almost half of training and development professionals were expecting a budget cut of 20% or more.

Over half of respondents to the Taming The Wolf report felt that the short-term benefit of saving money by not investing in training would have long-term negative consequences, with most professionals concerned that this could lead to the loss of key staff at a time when their expertise is most needed.

"During a recession, many organisations cut back on their employees learning and development budgets," said Andrea Cooper, a director at Common Purpose London. "This is entirely understandable, yet these are the very people who will be looked on to help the organisation pull through, spot the growth opportunities and accelerate out of an economic downturn."

The Chartered Institute of Personnel and Development also warned that slashing training budgets could have an adverse effect on companies' ability to survive the current economic climate.

"With a recession now seemingly unavoidable, organisations will be keener than ever to cut costs," said John Philpott, chief economist.

"But organisations should avoid short-term measures that do long-term harm. When times are tough, it is always tempting to trim training budgets. Yet evidence and experience shows that this is a false economy.

"Training cutbacks reduce the ability of organisations to cope in a downturn and can also damage staff morale, employee engagement and organisational performance for years to come."

The discussion offered the following advice for those responsible for staff development during the downturn:

• Keep the strategic goal firmly in sight and where the organisation will need to be when the economy shifts again

• Think laterally and look for the opportunities to create ‘first-mover advantage' when coming out of a downturn

• Go slower rather than cut entirely; the benefits will still accrue and you'll have less training to do when things improve

• Show commitment to and reward those people who you wish to retain. It will keep morale - and productivity - high

• Keep learning and development top of the agenda; it could make all the difference between surviving and thriving later on