UK jobless total climbs to 2.4m

The number of people out of work in the UK has risen to its highest level since 1995, official figures have shown.

Unemployment increased by 220,000 to 2,435,000 in the three months to June, taking the jobless rate to 7.8%.

Claims for unemployment benefit were the highest in 12 years, increasing by 24,900 from June to 1.58 million.

 

Average earnings, excluding bonuses, grew at their slowest rate since records began in 2001, the Office for National Statistics said.

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US House passes Obama's economic stimulus bill

House votes 246-183 to pass Obama $787bn (£547bn) plan to resuscitate the economy

The US House of Representatives has passed a $787bn (£547bn) plan to resuscitate the economy, handing President Barack Obama a big victory.

The measure passed 246-183, with no Republican votes. It will now go to the Senate, where a vote is expected later today.

The eight-inch-thick stimulus bill combines tax cuts for individuals and businesses with half a trillion dollars in government spending for infrastructure, health care and help for cash-starved state governments. Older Americans would get a $250 bonus social security check.

Seven Democrats voted against the bill.

Obama claims that the plan will save or create 3.5m jobs. But Republicans said it will not work because it has too little in tax cuts and spreads too much money around to everyday projects like computer upgrades for federal agencies.

Sourced from The Guardian

Q&A: What is a recession?

The dreaded R-word - recession - is in the air as every day seems to bring more gloomy economic news.

Many commentators are now openly talking about the current slowdown turning into a recession.

But how do economists define a recession and when will we know if the UK is going through one?

What is the definition of a recession?

This is a thorny question on which experts still disagree.

However, technically speaking, the UK economy would slide into recession when it experiences two successive quarters of what is known as "negative growth".

For this to happen, the total amount of goods and services produced by the UK - known as gross domestic product (GDP) - would have to contract on a quarter by quarter basis for a total period of six months.

read full article at The BBC

Manufacturing output falling at fastest rate since 1980s

Britain's recession-hit manufacturers slashed production in November at the fastest pace since the mid-1980s, leaving output below the level when Labour came to power in 1997 and signalling a severe contraction in the economy in the final quarter of the year.

Official figures released yesterday showed that manufacturing production declined by 2.9% in November. Exclu ding summer 2002, when celebrations for the Queen's golden jubilee caused a short-lived slip, that made it the weakest month since June 1985.

"As has been the case in many other economies, industrial activity in the UK has now fallen off a cliff," said Paul Dales, of the consultancy Capital Economics. He added that, in total, output had dropped by 7.8% from its peak, to a level last seen in 1995. "In other words, 14 years of gains in activity have been wiped out in just nine months."

Industrial production, which includes mining and energy as well as manufacturing, fell 2.3% in November, to a level 6.9% lower than the same month in 2007.

The fresh evidence of the parlous state of British industry will intensify demands for action from the government to support threatened firms and provide re-training for workers who lose their jobs. Gordon Brown will hold a "jobs summit" on Monday to outline his response to rapidly rising unemployment, and the Treasury is preparing a package of measures to unblock clogged credit markets.

Vince Cable, Treasury spokesman for the Liberal Democrats, said the scale of the decline in output raised fears that the manufacturing sector would be so severely gouged that it would be unable to benefit from rising demand and the cheap pound once the worst of the downturn is over.

"If the British economy is now going to be restructured, then the traded sector will have to have a larger role, and this is ominously not a good start," he said. "We can't have an economy that is based primarily on pyramid-selling schemes in the City and on finance; a return to more solidly based things like manufacturing has to be part of the mix."

The worse-than-expected news from manufacturers underlined the speed at which the economy deteriorated in the final quarter of last year. The National Institute for Economic and Social Research said the fall in output pointed to a 1.5% contraction in gross domestic product in the three months to December, which would make it the weakest quarter since 1980. The respected thinktank added that there had only been five quarters in which output fell more sharply since quarterly GDP figures were first produced in 1955.

Steve Radley, chief economist at the employers' group EEF, said few sectors had escaped the downturn. "This is a sign that confidence has fallen right acoss the globe, and that all the major economies are affected," he said. He added that further layoffs among distressed manufacturers were likely in the coming weeks, after the announcement of 1,200 job cuts at Nissan's Sunderland plant last week.

Many carmakers announced longer-than-usual shutdowns over the Christmas holidays in response to a sharp decline in demand from consumers suffering from the credit crunch, but the new figures reveal that car production plunged by 21.7% in November, even before most of the emergency closures began.

The woes of British industry were echoed right across Europe in November, as firms slashed production amid plunging demand from consumers in all the world's major markets.

Industrial production in Germany slumped by 3.1% in November, and in France it declined by 2.4%. Analysts at RBS said that on the basis of these gloomy figures, industrial output in the eurozone as a whole looked likely to have declined by about 4% in the final quarter of 2008.

 sourced from The Guardian

UK jobless 'to reach 3.4 million'

Unemployment will soar to 3.4 million as the financial crisis deepens, forecasters predict ahead of official jobless figures this week.

The Ernst & Young Item Club says the number of those out of work in the UK will pass 3.25 million by the end of 2010, and hit 3.4 million in 2011.

"All of the economic statistics are now in free-fall," it said in its forecast.

It warned the next 12 months would see the UK economy suffer its largest contraction since 1946.

The UK's gross domestic product would shrink by 2.7% in 2009 and another 0.5% the following year, the Item Club said in its latest report on the UK economy.

The official unemployment total reached a 10-year high of 1.86 million last October and some analysts expect the figure to increase to two million when new figures are published on Wednesday.

'Depression' warning

The group says that inflation and interest rates will stay close to zero, helping pensioners and those with tracker mortgages.

However, it said these conditions will do little to aid the housing market, set to fall 22% more over the next 18 months as it remains starved of finance for new mortgages. Meanwhile banks will be unable to lend to companies and consumers until the US sorts out its own banking problems.

"The government has failed to stop bankers hoarding cash and it seems this panicky behaviour is spreading out to the rest of the economy," the group warned.

The Item Club predicts that business investment will fall by nearly 17% this year, dropping almost another 6% in 2010 as worried company treasurers sit on cash.

In addition, consumer spending is expected to shrink 2.6% in 2009 as employees fearing for their jobs become "much more cautious" consumers.

sourced from The BBC read full article

UK jobless 'to reach 3.4 million'

Unemployment will soar to 3.4 million as the financial crisis deepens, forecasters predict ahead of official jobless figures this week.

The Ernst & Young Item Club says the number of those out of work in the UK will pass 3.25 million by the end of 2010, and hit 3.4 million in 2011.

"All of the economic statistics are now in free-fall," it said in its forecast.

It warned the next 12 months would see the UK economy suffer its largest contraction since 1946.

The UK's gross domestic product would shrink by 2.7% in 2009 and another 0.5% the following year, the Item Club said in its latest report on the UK economy.

The official unemployment total reached a 10-year high of 1.86 million last October and some analysts expect the figure to increase to two million when new figures are published on Wednesday.

'Depression' warning

The group says that inflation and interest rates will stay close to zero, helping pensioners and those with tracker mortgages.

However, it said these conditions will do little to aid the housing market, set to fall 22% more over the next 18 months as it remains starved of finance for new mortgages. Meanwhile banks will be unable to lend to companies and consumers until the US sorts out its own banking problems.

"The government has failed to stop bankers hoarding cash and it seems this panicky behaviour is spreading out to the rest of the economy," the group warned.

The Item Club predicts that business investment will fall by nearly 17% this year, dropping almost another 6% in 2010 as worried company treasurers sit on cash.

In addition, consumer spending is expected to shrink 2.6% in 2009 as employees fearing for their jobs become "much more cautious" consumers.

sourced from The BBC read full article