Thousands of workers face a pay freeze this year as the business community steels itself for another tough 12 months.

Hundreds of companies across Leicestershire are set to inform staff the green shoots of recovery are too fragile to allow increases in wages.

A Leicester Mercury survey revealed a quarter of the county's top companies were imposing a pay freeze.

About half of the companies questioned were planning to offer modest pay rises. The remainder would not comment.

Workers in banking, food and retail sectors were among those most likely to get modest pay rises and bonuses.

A managing director of one county company said: "Things continue to be very tight so a pay freeze will be maintained to the end of the year."

A managing director of a firm with 7,000 staff said: "We will be in a position to pay an increase of 1% to 2%.

"That is not because of the green shoots of recovery. It comes from us taking business from our competitors."

Leicestershire Chamber of Commerce, which has 1,100 member companies, said only a few were planning wage increases this year.

Chamber managing director, Martin Traynor, said: "Workforces have been prepared to accept a pay freeze, a reduction in hours and other measures to protect staff from losing their jobs.

"Their attitude is to be commended."

However, he said there was more positive news for exporters, who are benefiting from the weak pound, and service industries.

Pay deals last year slumped to their lowest level on record, averaging 1.3%.

An Industrial Relations Services analysis of 232 settlements nationwide revealed rises for workers in the private sector averaged 0.9%.

Awards in the public sector averaged 2.5%.

Julian Middleton, employment specialist at Leicester solicitors Freeth Cartwright, said: "We have had many calls from people asking if pay freezes were lawful."

A spokeswoman for a retail company which employs 600 people said: "We did not award a pay increase last year but have an incentive programme in place for the sales team."