Mitie, the British outsourcing services giant, announced on Monday that its first-half profits have been hit hard by cuts to local government budgets. In response to the sudden fall in profit, the company has been forced to cease some of its healthcare activities across the UK.

The company expects the unfavourable state of affairs to last for at least another year, after which its healthcare division is expected to return to profitability.

Ruby McGregor-Smith, Mitie’s CEO, says that new contracts awarded to Mitie should see the division “do very well” after the one-year critical period. During the first six months of 2015, the division incurred a £2.1m loss. Mitie’s healthcare revenue fell 19 per cent to £39m.

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