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London on dole: 650,000 jobs will be lost by 2010
Jonathan Prynn, Consumer Affairs Editor21.11.08
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SOME 650,000 jobs will be lost in London and the South-East by the time the recession has run its course in 2010, economists fear.
The downturn is claiming hundreds of posts a day across the region as a wave of redundancies that started in the City spreads across virtually all industries.
It means the scourge of mass unemployment has returned to the capital for the first time in nearly 20 years.
Latest unemployment figures show almost 300,000 people out of work in the capital - a rate of 7.4 per cent, and 202,000 in the wider South-East region, or 4.6 per cent.
But these totals are set to rocket over the next two years as employers desperately cut costs to survive.
With consumers spending less in the wake of the credit crunch, companies have been getting fewer orders and less work - which means they eventually have to lay people off as they try to stay profitable, or at least cut their losses.
But those who have just lost their jobs must trim their budgets, so they spend less too - leading to a vicious circle in which firms lose more business, more people are made redundant, and full-blown recession strikes.
In London, which already has the second highest unemployment rate in the country, it will only take another 100,000 on the jobless total for the 10 per cent mark to be hit.
Nationally the total is likely to pass the two million mark before Christmas and could hit three million - about one in 10 workers - before it starts to come down again.
It has not been above two million since 1997, but topped three million during the early Eighties and early Nineties recessions.
The big rises in unemployment tend to come some months after the start of a downturn, because employers wait to see if it is a temporary blip or a full-blown recession before going through the painful process of cutting their labour force.
But in the past week alone, announced job losses have reached 20,000. The real tally will be far higher because of the "drip, drip" effect of smaller scale lay-offs that do not get picked up in the media.
Ben Read, managing economist at the Centre for Economics and Business Research, said: "With unemployment being a lagging variable we can expect to see further sharp increases over the coming months, particularly given that the worst of the financial crisis has only been seen within the last two months."
The shake-out appears to be accelerating and has spread from the financial and property worlds to sectors such as transport, manufacturing, leisure, retail and law. Media and communications - a big employer in London - is also coming under pressure.
Paul Richards, media analyst at Numis Securities, said: "We are seeing significant reductions in advertising revenue in October across all areas of the media, whether that's press, magazines, TV, radio. It's being felt across the industry and inevitably that will lead to more job cuts."
Reader views (1)
Only 650,000 jobs, does that include all the 'black economy' jobs as well, the 'secret workforce' so beloved by the Labour Party. The ones that do not pay any taxes or council tax. We in Scotland can only look on in amazement at the stupidity of a Westminster based government that allows unfettered additional numbers to be added to the already 'hard pressed' normal taxpaying workforce located in London and the South East. Does that mean in one more year there will be an additional 650,000 + on top of the 'new unemployed' so should the actual figure be that x 2 i.e.1.3 million + 1 when we get rid of the appalling Jonathon Ross !
- Dutchy Holland, Glasgow
