Around 275,000 jobs will be axed in the business services sector over the next two years as the UK's economic woes deepen, researchers have warned.

Real estate, advertising and research and development will be worst affected by the impending recession, according to the Centre for Economics and Business Research (CEBR).

It predicts that business service jobs will be cut by 169,000 in 2009 compared to the previous year, with a further 106,000 lost in 2010.

The six-monthly report from the CEBR forecasts that real estate employment will reduce by 18% from its 2007 peak over the next year, with some 45,000 jobs set to go.

The real estate sector is being battered by the property market slump, which has taken it toll on estate agents in particular, forcing many to cut jobs or shut down altogether. But research and development will suffer a "horrendous" year in 2009, with a 12% reduction in jobs by 2011, while advertisers will see a "huge shake-out" as discretionary budgets get chopped.

Employment in the ad sector will be slashed to 1995 levels by 2010, down 17% said the CEBR.

Jorg Radeke, one of the report's authors, said: "The business services sector is set to have its biggest shake-out for decades.

"With discretionary budgets slashed, investment collapsing and the housing market remaining in the doldrums, it is difficult to see where any growth is going to come from."

The CEBR said the business services sector had grown in importance to the UK economy over the past 10 years, contributing around a third of all new jobs created and 5% of annual GDP since 1997. But its troubles will see employment in the sector fall by 7% from a peak in 2007, with output decreasing by more than 3.5% next year, added the CEBR.

Ben Read, a managing economist at CEBR, said: "The business services sector has been one of UK plc's leading lights, contributing substantial growth since New Labour came to power.

"Unfortunately, this is now coming to an abrupt end, as the markets served by the business services sector collapse."