Morning:
8°c
Banks blamed as more jobs go
Robert Lea and Jonathan Prynn12.01.09
A LEADING British businessman today warned that the bank lending famine risks "irreparable damage" to the economy.
In the bleakest assessment of prospects yet from a senior figure in industry, JCB boss Matthew Taylor said he was having to lay off almost 700 workers.
This was as a direct result of the high street banks' failure to provide credit to his customers, he said. The head of one of Britain's biggest exporters warned that the Government's bank bail-out had made no difference to the "unprecedented situation".
On a grim day for the economy when almost 4,000 workers learned their jobs face the axe, Mr Taylor said there was no sign of the recession bottoming out.
Mr Taylor said that he had hoped for an upturn in orders because of Mr Brown's £37billion bank recapitalisation and increased public spending.
But, he said, "two months later customers are still struggling to buy machines because of a lack of available credit". He added: "The ongoing reluctance of the banks to provide credit is aggravating an economic downturn which is now becoming much steeper than we could have ever envisaged."
The job losses overshadowed the Prime Minister's jobs summit at which he pledged to help up to 500,000 long-term unemployed get back into work or training.
Two companies went into administration and four others, including auction house Christie's in London, announced major cuts.
Furniture retailer Land Of Leather, based at Northfleet in Kent, and frozen food maker Findus called in the administrators in the latest alarming evidence that the economy is entering a deep recession.
Shares in Land Of Leather, one of Britain's leading sofa and armchair suppliers, were suspended at 3p this morning ahead of the appointment of Deloitte as administrators.
The company has 109 stores around the country, including 13 in London and employs 940 people.
It warned before Christmas of a 29 per cent collapse in orders and a slump into the red. A further 420 jobs were at risk at Findus. Administrators at Zolfo Cooper said they were called in "due to cash flow difficulties".
Christie's said it planned "a reorganisation which includes significant staff reductions," but would not confirm how many posts are to go in London. It employs 2,100 globally.
There was more bad news from china and glassware maker Waterford Wedgwood, which went into administration last week. It confirmed that 367 workers have lost their jobs today.
Book retailer Waterstone's said that it will shed about 200 jobs in a cost-cutting move. The chain, which has 303 branches around the UK, employs a total of 4,500 staff.
The cuts are linked to the introduction of a new centralised book distribution hub at Burton upon Trent.
Haulage firm Wincaton is also set to shed around 865 jobs through the closure of sites in Manchester and Gloucester, according to the GMB union.
There was some encouraging news from supermarket chain William Morrison, which said it planned to create 5,000 full and part-time jobs as part of a store expansion programme.
The jobs would be in a variety of positions, such as its fresh food counters which include butchery, fishmongery and bakery.
Reader views (25)
This is what happens when a country lives in America's pocket!
- Richad Rosen, Sydney - Australia
It was worked out that all these failed bailouts have cost everyone in the country around 16,000 pounds. They have failed miserably to stimulate the economy and have just been paid to the very people who got us into this situation in the first place. What would have been a better idea would be just to give everyone the 16,000 pounds they owe now. They would have paid off their arrears, bought a car or TV etc. This would have stimulated the economy far better and we would not be in this ever deepening hole we find ourselves in now. Its time there was a vote of n confidence in this pathetic Government. And soon !
- Duncan Walker, Lucky to live in Thailand
Here's an idea. Lend money to the banks at 12 per cent then ask them to lend at 2 per cent, so they lose ten per cent. Per year. If nothing goes wrong, such as the borrower defaulting which can sometimes happen. Errrrr, I think that might explain why nothing's happening. Nice one Gordon! The banks need to lend though they're not charities (though oddly they were behaving like ones up to the crunch, hence the mess they're in!).
- Da, london
Banks made too many questionable loans, loans that are now in default. So you people want them to keep doing that?? Well, that's one way to kill a country I guess..
- Trunk, US
Government should have used Northern Rock as a state bank, ploughed the £40B directly into it and provide the business loans so desparately needed to get the economy moving again passing on the Bank of England rate directly. See how quickly the banks would answer the challenge and start loaning competatively again... Instead the damn government 'give' our money away to the very businesses that have caused the massive problem in the first place. We can blame the banks for miss-management of our money, but the governemt has more to answer for! I fear that our government really have no idea what they are doing an are spinning out of control...
- Christian Smith, Sussex
to jaqueline, hampstead ,london ,
comment spot on as always. i raise a glass / my hat to you.
bravo !!
- Neil, london
Alex Pomeroy: thank you for your oh so refreshing & realistic note. Ever thought about running for MP - or is that thought to ghastly to contemplate?!
- Annabelle, london
With the six figure bonuses and salary received by bankers of the failed banks. I hope we have all learned a valuable lesson. Recovery may be slow and painful, but we will recover at a dreadful cost. Where are the bankers with their bonuses gone? a lot of them have jumped the UK Ship and set up estates in hotter climates.
- Ernest T C Singh, Richmond, London
The reason banks do not lend is that this moronic government lent money to them at 12%. US/German banks lent at 5 and 5.5%.
Therefore, no new mortgages/business loans can be had under a min 15%. This is not viable for businesses with the current tight or no profit margin, also very risky for banks.
Consider Gordon and Darling background: a PhD in the history of the Labour Party in Scotland betweeen 1921 and 1928; a leftish lawyer in Scotland. Do you think they can read a balance sheet?
- David, London
The sooner we get rid of Gordon Brown and his deadbeat cabinet the better. A nuLabour apologist for years I have constantly tried to put a good spin on them but I give up. This is all Gordon's fault.
- Keith Price, Luton
Bernie Madoff is going to stand trial for a massive fraud.
Using proper accounting (as imposed on industry) principles for govt income and expenditure I believe this would probably reveal a gigantic scam and waste of money.
When do G. Brown & Co get arrested and stand trial?
There would be a substantial saving in pension provision etc and they would have ongoing security provided by prison guards, and given the amounts involved, it should be a nice long sentence for each and every one of them. A warning for future govts.
- Hugh, Middx
Joe I really hope it won't be 2209 before Gordon gets his marching order!
- A Moreno, Luxembourg
"Running Britain is akin to running a major corporation"
What, you run up large debts and get out with as much swag as you can carry before the place collapse? Not sure I'd appreciate the difference personally.
- Tom, London, UK
The Cabinet is a dead dodo.From Gordon Brown downwards it is comprised of people who have litttle or no commercial experience and who would find it hard to obtain work at their currenr rate of pay elsewhere.Running Britain is akin to running a major corporation.It requires persons of commercial skill to steer it through the recession and the minefield of E U Legislation which hampers our recovery.The civil servants who are supposed to support the cabinet ministers appear to have been indoctrinated with labour inefficiency and lack of know how.The Treasury is not fit for purpose and is causing the Chancellor to run about like a headless chicken .Their latest offer to buy jobs by offwering employers £2500 is a non starter because the banks wont give businesses loans to allow them to continue to function.If the situation wasnt so serious it could be the subject of a very sucessful farce played at a West End Theatre
- Alex Pomeroy, london
I think nobody believes Crash Gordon anymore. The names implies how involved he is with the problems!
- Jacqueline, Hampstead, London
It would be nice for the senior executives of the banks that have received huge amounts from the taxpayer to tell us what they are doing with our money. It is just not good enough to put up a spokesman from the British Banking Association who does not have a clue what is going on. There has to be more accountability.
- Martin Sharpe, London
Not again! When are these so-called buisnessmen going to get it? The banks are bust. They can't lend: they don't have any money: that's why they've been bailed out: they're bankrupt! This recession is dead serious, people: it's going to hurt and mummy, in the form of big government, is not just going to kiss it better and make it go away. Get ready to bear the pain...
- James Murphy, Petersfield, hampshire
and of course, nothing to do with useless business models and executive pay deals.
Many of the companies that have gone to the wall in the last couple of months were merely being propped up by bank credit and boom time spending. In fact, many of the businesses were not viable and the the current economic climate are exposing weak operating models. It's just unfortunate for the staff.
- Sandy, London
The best thing this Govt. do is resign. The next best thing they can do is reduce taxation, especially on business.
Scrap Employeers national insurance, especially for small business with turnovers of less than £10m. Next, integrate National Insurance into income tax. Finally reduce the two so that the total amount payable is no more that 20% unless you earn over £150, then it could be set at 33%. Enforce the No Benefits for No work policy.
- Adam, Harrow, UK
Another day,another gimmick.
While Brown has waffled his way around the country,more companies go to the wall.
For weeks,warnings about bank lending have been met with government spin and highly publicised "summits".
No action is pushing up the jobless figures faster than his spin doctors can dream up new initiatives.
You are not listening Prime Minister.
- Jon Dee, N Warks UK
I believe that you mean the incompetent communist-influenced labour government are to blame!
Labour 1997-2209; a period of wasted opportunity under undoubtedly the worst government in British history.
- Joe, Thornton Heath, UK
It must be spelled out to the Banks. No normal lending means no bonuses. It is the only thing these greedy and selfish understand.
- R Bear, Willesden England
Mr Taylor has hit the nail right on the head. Unless the Uk and US governments work out that even with all these expensive bail outs and TARP like programmes, until Banks actually start lending again we risk getting further into the mire. After all, the Banks caused the problem in the first place. Unless we listen to Mr Taylor and people like him, we face a long hard road ahead.
- Ray, Milan, Italy
"Great Britain is uniquely positioned to ride out the recession"... the words of a delusional, unelected Prime Minister.
Any company Finance Director who so misled shareholders, employees, bankers, auditors and other stakeholders with such a gross lie, would have been given an immediate dismissal by the Board of Directors (and probably prosecuted as well).
Unfortunately Broken Britain is forced to wait whilst this idiot, who appears to be in total denial of any wrong-doing on his part, continues to make things worse.
Brown MUST be forced to go to the country as soon as possible. An election is needed to properly sanction the measures that really need to be taken. Just throwing other people's money around will not solve the systemic problems that lie at the heart of Britain's decline and fall.
- Ex-Pat David, Cape Town, South Africa
You can't feel sorry for Christies - they are snobbish and greedy charging 25% buyers premier- no wonder no one wants to buy from them. Sothebys will probably go the same way.
- Charles, london england
