Recession will be ‘longer and tougher’ than previously thought
17 November 2008
Unemployment could peak at almost three million by 2010, the CBI has warned in its gloomiest yet economic forecast.
In a revised economic outlook report the confederation says the UK’s recession will be longer and tougher than originally thought. It predicts that the recession will now run for most of 2009 and see unemployment peak at 2.9 million, up from 1.8 million at present.
John Cridland, CBI deputy director-general, said the confederation had “reassessed and downgraded” its expectations for economic growth because of the speed at which the downturn had so far hit the economy.
“What is clear is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting. An unwelcome consequence of the downturn will be a significant loss of jobs, many of them in sectors that have been relatively insulated until now,” he said.
The economy is expected to shrink quarter-on-quarter by 0.8 per cent between October and December this year, and to contract again for a subsequent three quarters before a slow recovery through 2010, according to the CBI’s predictions. Unemployment is expected to reach the two million mark by Christmas, with the jobless rate rising to 6.5 per cent.
Last week saw a wave of mass job cuts across varying industries. These included up to 10,000 at BT and 6,000 at Sun Microsystems.