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Unemployment soared and markets plummeted yesterday as the world’s biggest economies braced themselves for a prolonged recession.
The number of people out of work in Britain will rise to three million within two years, economists forecast, as unemployment surged at its fastest rate for 17 years. David Blanchflower, a member of the Bank of England’s rate-setting committee, said that the figure could exceed two million by Christmas.
In the United States, retail sales suffered their worst fall since 1992, plunging at twice the rate that analysts had expected, while one of the world’s biggest miners called time on the Chinese economic boom, sending global stock markets tumbling.
Shares on Wall Street fell 733 points, or 8 per cent. The bounce on Monday that greeted the co-ordinated bank bailout has now been all but erased, amid fears that the measures will fail to avert a global slump.
Ben Bernanke, Chairman of the US Federal Reserve, helped to unnerve the markets when he warned Americans that there would be no quick fix for their ailing economy.
Fears about rising unemployment spread across Europe. The FTSE 100 index fell 314 points, or 7 per cent, to 4,079. The Dax in Frankfurt was down more than 6 per cent and shares in Paris also fell, by almost 7 per cent.
Many of the casualties were miners, industrial groups and oil companies that provide the nuts and bolts of the global economy. They suffered after Rio Tinto, one of the world’s leading mining groups, gave warning of falling demand for metal from China’s mills and factories — a grim forecast of a near-certain global recession.
Oil fell yesterday below $75 a barrel to its lowest level this year, amid concerns that demand would dry up as the recession begins to bite.
The signal from Rio confirmed the worst fears of investors that the credit crisis would spread not just to the economies of Europe and America but also to the Far East, which has been underpinning global demand for raw materials.
In Britain, in the three months to August, the number of people out of work rose by 164,000 to 1.79 million on the Government’s preferred Labour Force Survey gauge. The jump came as a stark warning to Gordon Brown that, despite international praise for the bank bailout plan, clear signs of recession are now emerging.
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According to the tablets of stone from Ernst and Young as quoted in the times by David Smith, the UK recession will be short and the economy is fundamentally strong. Don't shout it too loud. Unless it is Armageddon, it does not make good copy.
Colin Grant, Montreal, Canada
Is it time for Gordon Brown to introduce loft lagging courses for Labour MPs before the next election ?
Alan Hudson, Sheffield, South Yorkshire
Stocks slump! Stocks soar! Stocks slump! House prices boom! House prices crash!. After this crisis is over will we ever be able to trust brokers, fund managers, financial advisors and journalists, the "experts" in property or investments and especially politicians, who never saw the tsunami coming.
peterfieldman, paris, france
I can see the Conservatives' 2010 election message on the advertising hoardings even now: 'Labour isn't working - again!'
J Jenkins, York,
Is Gordon Brown going to give himself another huge pat on the back over this?
Robert, Wigan, GB
Dead right, Jeremy Charles. And for God's sake do anything you can to stop your own lot - or any other government - following the mad gyrations into the void of our own prime minister . The Brookes cartoon in today's Times says it all.
Neil, Galloway, Scotland
"Any News media has a responsibility not to produce unaccountable negative slush." I totally agree with this comment. The media have played a large roll in creating all the negativity.
Yes, give everyone a break.
Stuart , Leek, UK
Joanna - surely Blair was the Great Leader and Brown is the Dear Leader?
nigel, ryde, uk
follow the logic through; a world financial structure needs a world political structure the EU tried an EU political structure and it failed for the same reasons that a world political structure, screamingly obviously necessary as it is,would fail
peter c, Devizes, Wessex
I feel sorry for the poor share farmers, sweating and slaving in all weathers to bring their crop of shares to market, may be they should switch to growing organic shares. do the get a subsidy? what kind of ground do shares grow in and how do you cook them?
peter c, Devizes, Wessex
Maybe,just maybe , after all the dust settles our younger generation of business people will realise that financial services right across the board do not produce anything and then perhaps this country will get back to doing what it always has done best manufacturing products to the world and EXPORT
Brian Hill , Bridlington , ENGLAND
"Labour isn´t working", that classic slogan was biding its time.
Tim C, Southern England, UK
The only comfort I can find in all this is that perhaps it will wipe the self-congratulatory smirk from the face of Our Great Leader.
Joanna, Corsham, Wiltshire
Famine is coming in Africa. the west will not help them millions are going to die.
Daphne Kenward, Cambridge, UK
That the leaders of the UK/US/Europe/Asia-Pacific and all those who fell at the feet of Brown don't realise that the economy is about 60% consumer spending and not banks is truly, devastatingly, shocking.
Obama/McCain? Put a blindfold on and stick a pin on a chart!
John, London,
Is there anybody there to explain where this huge bail-out money is coming from? USA doesn't have any savings but more than ten trillion dollars debt. Are the Fed Reserve and USA Goverment are just printing money at will without any gold reserve backing? Huh,even children will not play this game.
Miro , San Fracisco, California
If the politicians would keep their mouths shut, THAT would help. Remember Minogue, " Fools are paramount in politics, and there is nothing which they are unable to destroy ". No more money and the markets will stabilise, no one wants to be poor. !
Desmond Taylor, Houston, USA TX
Chasing a losing streak the government has spun taxpayers billions on one last desperate spin of the roulette wheel & apparently lost.
Just how stupid is this governement that thinks it could have stopped a tidal wave with a few sandbags.
Matt , Bournemouth, UK
Any News media has a responsibility not to produce unaccountable negative slush. Where are your supporting facts that the ' World is bracing itself for a prolonged recession'?
Media like yours creates panic..and negativity.
Give the world a break.
LEON, melbourne,
For years, the financial market players have made fortunes on equity that never really existed. Honore de Balzac is quoted as saying: "Behind every great fortune, there is a crime." Maybe now these fortunes will be closely examined and the crimes prosecuted.
Samir Kaiser, Cambridge,, England
Ah, the soothsayers are on the loose! Beware one and all -- the sky is falling! Perhaps we should all gather in the field and wait for the Mothership.
Get a grip. No one has a clue what tomorrow will bring. Go to work, make some money, and take care of your family. Life goes on.
Guy Thompto, Cedarburg, WI, USA
I understand people think this a tsunami, but it is a man made phenomenon and can be directed by Man. Regulation and support are the two fundamentals of the Brown Plan, and this is the best opportunity in recent history to get global cooperation to build one world financial structure.
john ellis, Hampstead, UK
Typical, fuel ptices go down, and theres no job to drive to.
ronnie, bucks, UK
this bailout will just delay the inevitable, politicians have talked of a day of reckoning for bankers, well i say the politicians that allowed this crisis to happen and the politicians that have created this bail out plan, ought also have a day of reckoning.
gb is on a par with chamberlin
will , grimsby, uk
Do something now brigade and an eye catching initiative each day politicians must realise that there is an appropriate time for any action. Also only a fool will try to deflect a tsunami with sand bags. a wise man will run to high ground and wait till the wave subside before taking initiative
raj, harrow, uk
Oh the irony of it all.. Bail-out this Bail-out that. Lets use that HP printer we call Treasury Model WeRSCRWD-08 to fix global problems..
lets face it we should have let the markets work themselves out. Yeah it would have been bad but now we all can consider ourselves a Socialist economy!
jeremy Charles, terrell, USA