Morning:
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IT'S grim and it's going to get grimmer. That is the message in the City where the mood at what few parties there have been, has been one of shared sorrow rather than celebration.
Whereas the City is always ahead of the economy and looking to the future, unemployment lags behind. Today's figures relate to the second and third quarters of the year. What's alarming is that this current, fourth quarter, has been awful. In the second quarter there was zero economic growth; in the third it fell by 0.5% and this one is heading for a full 1%. Next year will be much worse - a drop of 2%. What we see now is nothing compared to what is coming. The first few months of 2009 are likely to see a blitz of businesses folding, and huge job cuts. So far, we've not seen many major employers go under but there are likely to be plenty early in 2009. For some retailers a disastrous Christmas will shatter their last hope. In banking, the consensus appears to be that the job losses are just beginning. They do not include Woolworth's - we know they will rise by 35,000 alone when the chain finally closes its doors.
The widely predicted total of three million unemployed for next year looks easily achievable. The Bank of England has cut rates and will do so again. In the US, the Federal Reserve has slashed rates. They're desperate to encourage banks to recommence lending. Against this backdrop, the Government's decision to cut VAT appears even more empty and futile.
Reader views (2)
Mervyn King is talking absolute rubbish when he says 'Inflation is heading south'. The utility companies are refusing to lower gas & electricity bills so people are paying an inflated price to keep warm, food bills are still high and transport fares are set to rise well above the inflation (true figure or 'political' figure) in January. So how then, is inflation coming down? Wage settlements are well below 5% (unless you're a politician / Chief Executive / Local Council Manager) so things are going to be far more expensive for ordinary, normal people in January. Perhaps ES or another media group could challenge MK on his poor mathematics?
- Joannie, London, England
Pete Redfern Chief Executive of Taylor Wimpey has sent an open letter to all his staff. Published in the trade press and Independant today he seems to joke about the billions wipped of the share value of his company this year.Apparently the "volitility" in the share price has got nothing to do with him and the media are to blame.
In the past 12 months TW have laid off 1900 workers, lost billions in share value, exited the FTSE 100 and soon FTSE 250, saw the pension fund deficit rated as one of the worst in the UK.
Staff, shareholders and pensioners are wondering if the Chief Executive is part of the solution or part of the problem?
- Steve, London
