Responding to yesterday’s unemployment figures, TUC General Secretary Brendan Barber said: ‘Today’s figures show that unemployment is starting to accelerate and it now looks very likely that total unemployment will reach two million during 2009.
The Office for National Statistics (ONS) said yesterday the number of people out of work in the UK rose by another 81,000 between May and July, to 1.72 million, putting the official unemployment rate up from 5.3% to 5.5%, its highest level since early 1999.
The number of people claiming jobseeker’s allowance also rose by 32,500 to 904,900 in August. The increase in claimant count is the biggest monthly rise since December 1992 – during the UK’s last economic recession.
TUC leader Barber added: ‘It is more important than ever that we have a co-ordinated economic response to the downturn that puts more money into the pockets of middle and low income families’.
Barber urged that the Bank of England must play its part.
He said: ‘It is clear that deflation is a much more pressing threat than inflation, and interest rates should be cut.’
Paul Kenny, GMB General Secretary said, ‘These figures hide the misery visited on ordinary families from what the Chancellor warned is the worst economic conditions for 60 years.
‘GMB warned the government at least two years ago that the excess leverage in the markets by the multi-millionaire elite, which even then was threatening GMB members, would end in tears.’
He added: ‘With unemployment rising, people are looking to the government for a response.’
Kenny continued: ‘The party conference provides a perfect platform for the government to demonstrate that it has got the message and to take the powers to intervene to help citizens cope in these troubled times and take measures to put a stop to the excesses of the multi millionaire elite who have caused such damage to ordinary families.’
The Public and Commercial Services union said: ‘These are worrying times for everyone, and the real fear is that there will not be enough people working for Job Centre Plus to deal with new claims and help get people back into work due to government cuts of 40,000 jobs, across the Department of Work and Pensions.
‘There is a danger that people who need help the most will be left high and dry because of a lack of resources.’
• Second news story
HBOS ‘RESCUE’ – 40,000 jobs could go
Lloyds TSB was in advanced talks to rescue crisis hit HBOS and create a UK retail banking giant worth £30bn, it was reported yesterday.
Earlier on Wednesday morning, following the Federal Reserve Bank’s rescue of AIG, with an $87bn loan, HBOS’s shares on the stock market had crashed by 50%.
There was a real concern that a continuing share crash would see customers queuing outside its branches to recover their funds and that there would be an HBOS meltdown.
This drove HBOS towards a Lloyds TSB merger, despite counter-warnings that this would merely spread the contagion to its prospective partner.
Intense negotiations are now underway.
If merged, the megabank will have 38 million customers and will employ 150,000 staff, over 70,000 in each bank.
But analysts warn that more than 40,000 of these jobs will disappear, along with hundreds of high street branches and a number of call centres, if the merger goes ahead, and that this comes at a time when unemployment is rising at the fastest rate since 1992.
The deal, which previously would have been prevented by the Office of Fair Trading, is being hastily brought forward in an attempt to end ‘uncertainty’ about the strength of the UK’s biggest mortgage lender by halting the run on its shares.
Both the Treasury and Financial Services Authority (FSA) watchdog are encouraging the deal, desperately hoping to ease concerns about the health of the UK banking sector.
HBOS shares rose by as much as 15% after the merger talks began.
Under takeover proposals, HBOS shares would be worth considerably more than their current level of 100p.
The bankers hope that a merger will create a banking colossus that can cope with the current crisis facing financial markets across the globe.
On Tuesday, the US Treasury was forced to bail out insurer AIG with an $85bn (£45bn) rescue package, US investment giant Lehman Brothers collapsed on Monday and Merrill Lynch was sold to Bank of America in a $50bn deal.
With the Fannie Mae and Freddie Mac buy-outs the US will have spent $340bn of tax payers’ money, propping up ailing financial houses.
