Unemployment in UK to reach 2 million by Christmas

After the global adulation for its bank bailout package, recession-hit Britain is gearing up to fight unemployment, which has hit all sectors of the economy. The office for National Statistics said that unemployment rose by 164,000 to 1.79 million in the three months to August, the biggest rise since June 1991, and experts believe it to rise to 2 million by Christmas.

Those claiming jobless benefits rose from 31,800 to 939,900, the highest since November 2006 with the increase for August was 35,700, the most since 1992.

The Bank of England's monetary policy committee member, David Blanchflower, said, "These numbers are truly horrendous and much worse than I had feared," and added that his earlier prediction, that unemployment would rise to two million by Christmas now looked conservative.

Others predict an even gloomier scenario and forecaste that unemployment in Britain would climb by a total of betweem 1.5 million and 3 million by the end of 2010.

The hardest hit area in the country was London, where unemployment rate rose faster than anywhere else. London, the north-east and north-west have the highest unemployment rates.

Compared to the previous quarter, 19,000 job losses have taken place in Scotland, 10,000 in Wales, Yorkshire and Humberside lost 17,000, the North West 14,000, the East Midlands 13,000 and the South East 28,000 with economists predicting even bigger jobless rises ahead as the financial crisis takes its toll on a wide variety of companies.

Gordon Brown, speaking during an EU summit in Brussels, said, "We will do whatever we can to ensure that people can stay in their jobs, we will do whatever we can so that people who lose their jobs can get new skills for the next job. We will do whatever we can to create opportunities."

With falling house prices, declining car sales, levels of industrial production going down and rising inflation, economists say that with the economy slowing and moving into recession, jobs will be lost faster than the government can create them.

Economists generally consider employment to be one of the last indicators to register trends in growth.

Jobs are being cut right across the economy with banking firms being at the forefront of companies shedding staff in the face of the economic slowdown and housing market slump. The latest figures do not include the banking jobs lost in September, and do not include the expected losses from the major bank mergers.

According to a report by the Centre for Economics and Business Research, banking firms may shed 62,000 jobs in London by the end of next year to reach the financial services sector's lowest level since 1998.

Manufacturing and construction have also taken a hit with the Institute for Employment Studies saying that when recession sets in completely it is still likely to hit lower skilled workers hardest, those who find it hard to move to a new job and who have less wealth to see them through a tough recession.

Job losses are also in retail and hotel and catering sectors.

Car manufactures seeing a drastic slump in sales have cut jobs, closed plants and reduced shifts with sending workers home on long leave.

Confectionery giant Cadbury announced 580 job losses and ITV, Britain's largest commercial broadcaster, is cutting around 1,000 jobs.

Luxury car manufacturer, Jaguar Land Rover (JLR) announced it was seeking 200 voluntary jobs across the UK (See: Jaguar wants voluntary job cuts) while the Ministry of Justice (MoJ) is cutting nearly 10,000 jobs as part of a round of budget cuts to battle the tough economic climate.

Zurich-based UBS AG said it would cut 2,000 jobs in its European investment banking unit with 500 losses coming from Britain.

Bellway Plc, the U.K.'s homebuilder reporting fall in profits said it was in the process of cutting 35 per cent of its workforce.

HSBC reducing its workforce by 1,100 in Europe with 500 from Britain and Bradford & Bingley is getting rid of 300 of its staff.

Across the Atlantic, New York could lose as many as 1,65,000 jobs in the next two years and also lose revenue because of the economic meltdown with Wall Street accounting for nearly a quarter of all the city's wages and around 10 per cent of its tax revenues.