More than a million Britons will be out of job by Christmas

Subscribe to Oneindia News


London, Oct 12 : More than a million Britons will be out of work and on the dole by next month as the toxic fallout from Black October filters down to ordinary families, economists are warning despite Downing Street's desperate efforts to shore up the economy in the face of the escalating credit crash may not be enough.

A bleak Christmas lies ahead for many as the City turmoil spreads into the so-called real economy, The Guardian reported.

Companies are now being squeezed on two vital fronts, with shoppers abandoning the high street and bank lending drying up, making it almost impossible for smaller businesses to get credit to stay afloat.

Geoff Hoon, the new Transport Secretary, warned that there were 'potentially serious consequences for small business, for employment' from the current crisis, reflecting private warnings to the Prime Minister's new economic 'war cabinet' that job losses and business collapses later this year are now virtually inevitable.

Official unemployment figures for September, due on Wednesday, are expected to show another increase in job losses - although this will not yet be the sharp upward spike which is expected as the full consequences of last week's stock-market crash filter through. Some forecasts suggest that unemployment will hit two million by Christmas.

Some government officials warned that those slipping into unemployment could find themselves much more isolated than in the last recession. They pointed out that unemployment benefits had slipped relative to earnings and there were now fewer council houses available.

Ministers are now under pressure to defend jobs, with some Labour MPs reporting a backlash from constituents furious that billions have been spent rescuing bankers while factory workers' jobs go to the wall.

The British Retail Consortium will release figures this week showing another fall in sales on the high street last month, with director general Stephen Robertson warning that sales for non-food retailers such as electrical stores had 'fallen off a cliff'. Some retailers are reducing opening hours to save costs.

Shoppers are also cutting back on 'big ticket' purchases like cars, with the number of new registrations in September down by a fifth on August, according to the SMMT, the motor vehicle manufacturing body.

Car plants have already axed thousands of temporary staff and put others on four-day weeks or halted overtime. 'If there is no pick-up in demand for cars, there are bound to be more job losses next year,' said Roger Madison, national automotive officer for the Unite union.

Others at risk include the aviation industry - Willie Walsh, the British Airways chief executive, is predicting that up to 30 airlines worldwide will go bust - while further losses are likely in the City.

Unemployed bankers are being advised to seek work in Shanghai or Mumbai amid warnings that the Square Mile will be permanently reshaped by the crisis.

With charitable donations falling, even the voluntary sector is also cutting jobs. Oxfam needs to shave its budget by up to 15 per cent because of falling income, while the National Council of Voluntary Organisations expects some smaller charities to go under.

Alan Clarke, economist from the bank BNP Paribas, said the number of those claiming unemployment benefit was due to break the one million mark by the end of next month at the latest, with up to two million looking for work by December: he is forecasting unemployment to hit 7 per cent by the middle of next year and carry on rising until 2010.

Philip Shaw, economist at Investec, said it was difficult to be optimistic: 'The sentiment is one of widespread doom and gloom. Businesses are now being affected by the credit squeeze. The economy has shuddered to a halt.'

At the height of the 1980s recession, three million were unemployed. The question now is how far the pain will spread. As one boss told a senior CBI official: 'We know there is a tsunami coming, but we do not know if it's going to knock us over or just wet our feet.'

ANI

Please Wait while comments are loading...