300,000 jobs will be axed by next Easter, say economists

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The Chartered Institute of Personnel and Development issued the dire forecast which could see unemployment soar above three million by 2010.

The managers' organisation predicts that 300,000 jobs will go in the first three months of 2009, with another 300,000 by the end of the year - and even more if interest rate cuts and the Government's multi-billion fiscal stimulus fail to prop up the economy.

"We are going to see a very bleak period between New Year and Easter," the Institute's chief economist John Philpott told BBC Radio 4's Today programme. "A lot of employers have been waiting for the turn of the year before making redundancy announcements."

The financial, retail and manufacturing sectors were particularly vulnerable but all parts of the economy would be hit, he added.

Mr Philpott predicted that personnel departments would "feel more like ER or Casualty" as swathes of jobs are axed.

He added that unemployment, now at 1.86 million, could "easily" rise above three million by 2010.

A separate report found 165,000 private-sector jobs were lost from 1 November to 21 December.

David Frost, director general of the British Chambers of Commerce, believes salaries could also be cut or frozen and called for the minimum wage not to rise.

Richard Lambert, director general of the CBI, called for major developments in industrial policy to counter the downturn.

Gordon Brown is seeking to steel Britain for the downturn by drumming up a Blitz spirit. "The scale of the challenges we face is matched by the strength of my optimism," he is due to say in his New Year's message.

However, a Financial Times poll found most people do not believe government forecasts that the recession will end in the second half of next year.