British firms will have their pick of the UK workforce after work and pensions secretary James Purnell revealed that contingency plans were in place to deal with mass unemployment.
Mr Purnell claimed the UK is facing unemployment on a scale not seen for more than a decade, and warned that the government would be powerless to intervene to save jobs.
His gloomy analysis came after the first admission of a government minister that Britain is heading for recession.
Tom McNulty, the new work and pensions minister said yesterday that the success of the government’s recent attempts to stabilise the banking system “will be the precursor to how deep and long the recession will be”.
“We’re slowly getting to a stage where the slowdown may well turn technically into a recession and then we’ll be talking about the nature and depth of the recession,” McNulty added.
Moves to prop up the UK economy were earlier this week welcomed by the business community.
Upon hearing news of the interest rate cut the Federation of Private Business’ director of finance, Nick Palin, said: "With many analysts predicting that the UK is already in a recession, or very close to one, this decision should boost the market and hopefully will inject some confidence in to it."
The British Chambers of Commerce (BCC) also welcomed the news, but suggested that further cuts will be necessary in the future.
Director general David Frost said:
“The economy has been facing an emergency, and the MPC could not afford to wait. This cut will, for now, steady the markets and inject much needed confidence.”
“Over the next four months, interest rates must be cut to four per cent as a minimum,” he added.
© Crimson Business Ltd. 2008
