This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7732223.stm
The article has changed 3 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| 'Close to 3m unemployed' by 2010 | |
| (about 6 hours later) | |
| The UK's recession will be tougher and longer than first thought, the business group CBI has warned. | The UK's recession will be tougher and longer than first thought, the business group CBI has warned. |
| It estimates that the economy will shrink by 1.7% in 2009, a dramatic downgrade from the forecast of 0.3% growth the CBI gave in September. | It estimates that the economy will shrink by 1.7% in 2009, a dramatic downgrade from the forecast of 0.3% growth the CBI gave in September. |
| The group added that unemployment could peak at close to 2.9 million by 2010, up from 1.8 million at present. | The group added that unemployment could peak at close to 2.9 million by 2010, up from 1.8 million at present. |
| Business Secretary Lord Mandelson has defended government plans to increase borrowing to boost the economy. | |
| "We have to take every action we can as a government," he told the BBC. | |
| He said the recession was "not made by the government" but that it was the government's job is to make the recession "as short and as painless as possible". | |
| "Now people will say but you're resorting to borrowing in order to deliver the stimulus that's needed," added. | |
| "My answer to that is what is the alternative?" | |
| 'New order' | |
| Meanwhile, the UK's biggest union, Unite, has drawn up a 10-point plan to invigorate the UK 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 John Cridland, CBI deputy director general | |
| It includes an increase in public spending and a halt to house repossessions. It also calls for a million new affordable homes to be built. | |
| The union also wants to see support for manufacturing, a windfall tax on energy firms' profits, tighter regulation of the financial sector, and increased worker rights. | |
| Unite joint general secretary Derek Simpson called for "a new economic order". | |
| Downgrade | Downgrade |
| The CBI report said it had hoped the recession would be "shallow" but said October's banking sector turmoil now made this unlikely. | |
| The UK economy shrank for the first time in 16 years between July and September, confirming that the UK is on the brink of recession. | The UK economy shrank for the first time in 16 years between July and September, confirming that the UK is on the brink of recession. |
| The UK will be technically classed as being in recession if the economy, as expected, contracts in the fourth quarter as well. | The UK will be technically classed as being in recession if the economy, as expected, contracts in the fourth quarter as well. |
| John Cridland, CBI's deputy director general, said that turmoil in the banking system in September and October had sent consumer and business confidence plummeting. | John Cridland, CBI's deputy director general, said that turmoil in the banking system in September and October had sent consumer and business confidence plummeting. |
| "Given the speed and force at which the downturn has hit the economy, we have reassessed and downgraded our expectations for UK economic growth," he said. | "Given the speed and force at which the downturn has hit the economy, we have reassessed and downgraded our expectations for UK economic growth," he said. |
| "But the fast-moving and global nature of this crisis means it is impossible to look far ahead with any certainty. | "But the fast-moving and global nature of this crisis means it is impossible to look far ahead with any certainty. |
| "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." | "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." |
| 'Troublesome' | |
| Mr Cridland told the BBC that the slowdown in the economy was the effect of a "double whammy". | |
| "First of all the banking crisis had really deep effects on the availability of credit for business - not only credit from the banks, but credit insurance as well - and that is now proving troublesome for an awful lot of businesses small and large," he said. | |
| "Alongside that, the impact of relentless bad news every day on the news has caused people to stop spending - companies as well as individuals - so there's a sharp fall in demand for products and services and businesses having to baton down the hatches." | |
| The CBI expects the economy to contract by 0.8% in the final quarter of 2008 and says the economy will continue to shrink in the subsequent three quarters before beginning to recover in 2010. | The CBI expects the economy to contract by 0.8% in the final quarter of 2008 and says the economy will continue to shrink in the subsequent three quarters before beginning to recover in 2010. |
| Recovery 'long way off' | |
| The group forecasts that interest rates could possibly fall as low as 1.5%, from 3% currently, as the Bank of England moves to kick-start the economy. | The group forecasts that interest rates could possibly fall as low as 1.5%, from 3% currently, as the Bank of England moves to kick-start the economy. |
| It said inflation was likely to ease, with the rate of consumer price rises expected to fall to 1.7% from 4.2%. | |
| Mr Cridland told the BBC: "We're predicting something like five quarters of negative growth. | |
| "I think we would see the last quarter of 2009 - in other words a year from now - at the point where hopefully we would just begin to get back to steady growth and then a beginning of an upturn in 2010. | |
| "So I'm afraid it's quite a long way off." |