UK businesses are offering pay rises to key IT staff who threaten to go join competitors, IT recruitment agency Harvey Nash has revealed.

Harvey Nash said that one in five IT professionals are receiving counter-offers that are helping to drive up salaries, according to the Financial Times.

This is in spite of the difficult jobs market, where, for example, IT contractors in the financial services sector are set to see the number of jobs decline.

Albert Ellis, chief executive of Harvey Nash, told the FT: “Employers are fighting to retain mission-critical staff. The squeezed middle who have had no pay increase in the past two to three years are looking for more income; nor do they live in fear of moving jobs.”

Ellis said that the pay rises are an anomaly, particularly in light of the public sector job cuts as a result of the government's comprehensive spending review, which are still fully hit.

However, Ellis believes there is still ongoing improvement in the jobs market, with a “steady increase” in hiring in the retail, professional services, food and manufacturing industries.