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27,000 axed at Woolworths on dark day for High Street
Jonathan Prynn, Consumer Affairs Editor17.12.08
LONDON suffered one of its worst days today since the start of the economic downturn.
A "terrifying" surge in the jobless total, more bad news from the high street and a further lurch in the value of the pound all fuelled the growing sense of crisis.
Woolworths confirmed this afternoon that 27,000 jobs will go when all 807 stores close on 5 January.
The number of people claiming unemployment benefit climbed above the one million mark for the first time since 2000. The rate at which jobs are being lost was the fastest for 17 years. In London the total has risen to 308,000, 7.6 per cent of the workforce. More than half of recent job losses have come in middle-class professions such as finance, advertising and consultancy concentrated in the capital.
Economists said the figures were the tip of an iceberg that will claim 120,000 well-paid white collar jobs in London by the end of 2010.
The dire jobless figures and the prospect of bank rate cuts sent the pound down to a new low against the euro. This afternoon sterling stood at 1.077 euros, down more than three cents.
There was more bad news for retailers with the CBI's distributive trades survey, its measure of activity on the high street, falling to its lowest level for a quarter of a century. There was also a warning that the slump in the travel industry could claim 15 more operators over the winter.
City analysts said the jobless figures revealed how the recession is reaping a disproportionately higher toll among London's professionals.
Ben Read, managing economist at forecasters CEBR, said: "The effects of mass redundancies in the financial and business services sector are now starting to come through in the statistics. The data reveals that the number of jobs in this sector fell by 72,000 over the three months to September.
"Worryingly, this data is for the period before the collapse of Lehman Brothers therefore we can expect to see much worse news on jobs in this sector in the months to come." Analysis by CEBR suggests that 62,000 London jobs will be lost in the financial services industries of the City, Docklands and Mayfair -where many hedge funds are based.
A further 60,000 will go in the business services sector, which includes estate agents, lawyers, consultants, advertising professionals and architects.
In a further indication of the cold economic winds sweeping through London's professional classes, property giant Savills issued a profit warning that sent its shares tumbling.
Lloyds TSB chairman Victor Blank said today that house prices will fall another 10 per cent. Economists said the speed of the economy's decline, combined with last night's historic decision to take US interest rates down to a record low, meant further reductions in the cost of borrowing are almost inevitable next month.
The minutes of the last Bank of England meeting, published today, show that its monetary policy committee considered whether to cut more than a percentage point. It only pulled back because of fears about the impact on sterling. Dr Howard Archer, chief European and UK economist at forecasters IHS Global Insight, said: "We expect the Bank of England to reduce interest rates by at least a further 0.75 per cent from 2.00 per cent to 1.25 per cent in January.
"Even so, another one per cent reduction is certainly possible in January."
Corporate recovery firm Deloitte said 200 of Woolworth's stores would close by 27 December followed by a second batch of 200 on 30 December, another 200 on 2 January and the final closures on 5 January.
Deloitte is set to flood the stores with 50 million extra items in the final run-up to Christmas with discounts of 60 per cent and more. Deloitte said it had received interest from other retailers for 300 of the stores.
Reader views (10)
It's a great loss for the high street but more so for the staff at Wooly's.
- Barry, Swanage UK
When interest rates have been slashed to 2% with little effect, I do not understand how a further cut will help. The £ is sinking fast against the Euro, so imports are more expensive, but what is the growth in our exports as a result? And inflation continues above the bank base rate, so savings in cash are being eroded. What a mess this country is in.
- John, Rye, UK
Perhaps the Government might now consider its lack of prudence in exporting so many jobs, driven out by its punitive taxes.
- Brian, Farnham UK
nice to see that the redundancies in the financial and business sector are coming through, the people who created the mess are getting their reward, a pity everyone has to suffer because of their greed
- Colin, South London England
loved the hot peanuts woollies sold during the early fiftys, hated the four sided counters where the assistants would always turn their backs on you, but that sums up the trouble, memories from the fiftys, what since.
- Eddy, richmond
End of an era for the UK. Sad to see a landmark like Woolworths disappear from the British scene.
- Tony, Toronto, Canada
You can take a horse to water.....etcetc. Lower interest rates to zero, a bad idea. You cant make people borrow, when they are already in debt and probably cant finance that debt even at zero. Say You have an asset that cost £100,000 and is now worth, say £50,000, at zero rate you are still better to walk away. Anybody who has been prudent (a scottish word interwoven into Anglosaxon) and saved for retirement must now sorely regret it. All real economic growth throughout history has been based on savings not debt, particularly when that debt is in default and will never be repaid.
- Colin Bond, London
New Labour but the same 'Old problems'. As sure as night follows day, Labour end up ruining the economy, taxes rise, public sector jobs rise massively, the pound devalues and there is strikes galore! I guaranteee that there will be a whole host of public sector strikes in the new year - council workers, jobcentre staff, nurses....thye will all be demanding huge pay rises that the Govt are unable to fund, and there will be a general election - the only amazing thing is that it has taken them 11 years to accomplish what they normally do in 5!
- Gary, amersham
... and thank you for boom & bust The Great Leader PM Gordon the moron Brown's economic miracle.
- Joe, Thornton Heath, UK
I hope these ex employees will realise that Brown is the man for the job and will steer them and us off the rocks.
- Satnam Singh, Carshalton, England
