According to the results of a study based on official figures, big cities outside London have seen the most job losses in the past 12 months.

The worst rise can be seen in the Midlands, in Birmingham, where the number of people unemployed and seeking benefits for this, rose from 5.3% to 7.3%.

They also found that the likes of Leeds, Glasgow, Sheffield, Hull, Manchester, Bradford, Kirklees, Liverpool and Bristol also saw a big jump in the number of unemployed.

The Work Foundation conducted the study, using official figures covering the 12 months leading up to February of this year.

Policymakers Ignoring Local Problems

They saw that the most increases of unemployment were found in the North of the country, but also the West, the Midlands, and Scotland suffered a lot as these areas are dominated by the manufacturing industry.

The major player however, was Birmingham. The number of people collecting jobseekers allowance here has risen from 33,274 people in February of 2008 to 45,657 people this February.

However, the biggest increases in terms of percentages comes in council areas which saw no benefits of the ‘boom’ in the economy before the recession began. For example, those in Wear Valley saw an increase from 2.9% jobseekers to 6.2%.

According to Naomi Clayton, a senior researcher at the Work Foundation: “Policymakers ignore how recessions play out locally at their peril.

“It is to be hoped that the forthcoming Budget focuses more attention on the large cities – Manchester, Leeds, Birmingham –that can drive the recovery, as well as recognising which areas need the most support to survive and prepare for better times.”

What Previous Statistics Have To Say

In March, the unemployment rate in the whole of the UK rose to over 2 million, the highest it has been since 1997 according to the Office for National Statistics (ONS).

In February this year, those claiming jobseekers allowance in the UK reached record highs of around 1.39 million people.

The ONS has also found that between November and January, the rate of unemployment rose by 6.5% in total.

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Unemployment hit 1.97 million in the final quarter of last year, putting it at its highest level since 1997 according to figures from the Office for National Statistics.

In January of this year, the number of people getting Jobseeker’s Allowance reached 1.23 million, an increase of nearly 74 thousand people.

This news comes as the Bank of England warns that the UK is headed for a “deep recession.”

What Analysts Have To Say…

Analysts believe that unemployment could reach 2 million in the first quarter of this year, which would be its highest rate since 1997, and many fear the situation could get worse as the economy sinks deeper into recession.

Senior Economist at the Institute for Public Policy Research, Tony Dolphin said: “Unfortunately it seems inevitable that unemployment will exceed 3 million during 2009″.

Head of Consultancy with Employment Law Advisory Services has also said: “From early in December, the number of firms seeking our help in making redundancies simply exploded.

“Things will certainly get worse before they get better. We would expect to see another significant increase in the number of people out of work in the figures published next month, as many more firms were forced to cut staff early in the New Year.”

Who Is Affected Most?

It seems that the worst hit at the moment are young people between the age of 18 and 24, with their unemployment rate currently standing at 11.8%.

The amount of people receiving Jobseeker’s Allowance has now rose for 12 consecutive months and is currently at its highest level since the summer of 1999.

British Chambers of Commerce, David Kern, said: “Unemployment continues to rise in the face of a worsening recession.

“We know businesses do not want to lose key staff, but they are struggling with cash-flow.”

He also said that freezing national minimum wage, forgetting plans to increase National Insurance, cutting business rates etc would help companies keep their employees.

What’s Being Done To Resolve The Problem?

Gordon Brown is meeting with business leaders to discuss what can be done to help.

Expected at Downing Street are executives from companies such as Royal Mail, Whitbread, Centrica, National Express, Travelodge and Sainsbury’s for the first National Employment Partnership meeting.

These companies, along with places like the NHS and local authority leaders, will agree to advertise non-specialist jobs vacancies through Jobcentre Plus, and will also start offering apprenticeships.

A Local Employment Partnership Scheme has also been launched.

“The LGA has committed to working with local authorities to increase the number of council apprenticeships by 7,500 to ensure that people are given practical skills that will stand them in good stead for years to come,” said the chairman of the Local Government Association.

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In the midst of an economic crisis, it’s not all doom, gloom and unemployment.

Going against the grain, Asda has announced it is to create 7,000 new jobs this year, and in doing so will become the latest supermarket to add new positions, as their sales continue to rise despite the recession.

Asda has said it will create 3,700 of the new jobs by opening 14 new stores and extending 15 of its current ones.

On top of this, 2,000 jobs are planned to be created at its home shopping unit, and around another 1,000 through organic growth.

Asda has said that it specifically aims to target those that have been unemployed long-term when it fills its 3,000 new vacancies, which will provide both full and part-time work.

Asda’s Chief Executive Andy Bond said: “our track record of recruiting and retaining people is second to none.”

Asda also said they are going to work with agency Remploy in order to try and secure jobs for a significant number of disabled people that are currently unemployed.

They are also looking to fill about 120 new jobs in their in-store pharmacies and opticians.

Not only is Asda creating new jobs, but also broadcasters BSkyB have announced their plans to create 1,000 new jobs in order to cope with continuing strong demand for its services.

Other supermarkets that are creating jobs include:
• Sainsburys – which is creating 5,000 new jobs this year

• Waitrose is planning on creating 4,000 new posts

• Morrisons is planning on adding 5,000 new jobs

• And Tesco aims to add up to 10,000 new positions.

However, on the other hand, companies that have recently announced more job cuts include:
• GKN – the car parts firm announced it was to cut more jobs this year after 242 people lost their positions in October due to lack of new vehicle sales

• Shop Direct – the home shopping retailer is planning to cut around 900 jobs in their call centres due to an increase in online buying
• Thames Water has recently announced it is planning on trimming its workforce by about 300 people

• Aston Martin – the luxury car production company is cutting all staff to working three days per week.
GKN have said that they have already shed 2,800 jobs globally since October, but that more were to follow due to the slump in the global car industry.
This was announced before Peter Mandelson, Business Secretary, met with UK car industry bosses in order to discuss the details of the £2.3billion support package the government is offering.
The deal was announced on Tuesday, and includes a scheme to unlock £1.3billion of loans from Europe for car manufacturers and major suppliers.
The government are also offering a guarantee of up to £1billion of further loans.
Lord Mendelson said: “we had a productive discussion on how the industry and supply chain can access these guarantees as well as the previous measures we have outlined.”

As the financial crisis continues to deteriorate, it is predicted that unemployment will reach 3.4 million. Official figures will be released later this week.

After unemployment reached an official 10-year high in October last year, Ernst & Young Item Club calculate that the number of people out of work in the UK will reach 3.25 million by the end of 2010, and may hit 3.4 million in 2011.

It also warns that this year will probably see the UK suffer its largest economic contraction since 1946, stating that the UK’s gross domestic product will shrink 2.7% this year and an extra 0.5% in 2010.

Ernst & Young also believe inflation and interest rates will stay near zero, which will help pensioners with tracker mortgages.

However, this also could cause trouble in the housing market, which is set to fall 22% over the next 18 months.

The banks will also be unable to lend money to companies and consumers until the US sorts out their banking problems.

They said: “The government has failed to stop bankers hoarding cash and it seems this panicky behaviour is spreading out to the rest of the economy.”

Ernst & Young also predict a drop of 17% in business investment in 2009, and another 6% fall on top of this in 2010. This on top of consumer spending shrinking by an expected 2.6% as jobs become more scarce, and consumers more cautious.

Their chief economist said: “it is easy to criticise and conclude than none of the government’s policies are working.
“However, we must not lose sight of the fact that they have prevented the collapse of the monetary system as we know it.
“But more needs to be done urgently otherwise the flow of credit will remain frozen and the economy will remain in recession.”

He added however, that the weak pound offers opportunities for British manufacturers to encourage exports, leaving the economy in a better state after the recession than prior to it.

Working Futures, published by the UK Commission for Employment and Skills, has predicted that employment will grow in the long term despite current problems. It believes that employment would rise over the next decade as a whole, creating 13.5 million jobs, 2 million of which will be new.

Men will take on the majority of the new roles, and are likely to take over some of the jobs more traditionally considered as women’s jobs e.g. childcare, beauty therapy etc

Certain occupational areas will suffer losses in jobs, particularly manufacturing, administration and clerical work, which are expected to lose around 400,000 jobs in the next decade.

Chief executive of the UK Commission for Employment and Skills, Chris Humphries, said: “We’re pretty confident that despite the short-term uncertainties the labour market will pick up again fairly swiftly and remain buoyant in the longer term to 2017.”

In an attempt to help stop the increase in unemployment, Gordon Brown has promised to help half a million people back into work or training.

According to Mr Brown, employers will be given £2,500 for every person they train who has been unemployed for the past six months. He also promised that communities would not be forgotten. Though with 1.8 million people currently looking for work, the Tories are saying the governments job package doesn’t go far enough.

The Prime Minister set out his plans at the Science Museum in London, to prepare Britain sectors such as environmental technology, advanced manufacturing, education and healthcare.

In his speech, he said: “Failure to act now and to do so in coordination with our international partners would mean a deeper and longer global recession.
“It would mean temporary rises in unemployment becoming permanent. It would mean as in the past whole communities written off, and that would mean lasting damage to our economy and a bigger bill to pay in the future. And this will not happen on my watch.
“We cannot always prevent people losing their jobs but we can help people finding their next jobs.”

His audience consisted of some who had been unemployed for three months or more, were told they would get help, including ‘extensive’ job interview training, and would have to sign on weekly for benefit payments.

The scheme has been set up primarily to help those who have been unemployed for six months or more. The Work and Pensions Secretary said: “What we have learned from previous recessions is we need to make sure people don’t feel out of touch with the labour market…
“We don’t want to waste a generation of people, as has happened in the past.”

 A five-point plan has been created by the Federation of Small Business, to form up to 400,000 new jobs. Some of the measures it is asking for include the promotion of part-time working, simplified regulation and lower taxes. Other requests include an investment in apprenticeships and more opportunity for small businesses to bid for government contracts.

Union leaders present at the summit will ask for more job creation programmes, on the other hand, environmental campaigners will want a higher investment in energy efficiency.

Unite’s joint general secretary, Derek Simpson, has welcomed attempts to create new jobs, but has said there needs to be more focus on protecting existing jobs, especially in car manufacturing.

He said: “The businesses are basically sound. It’s a question that they have a cash-flow problem.
“Commercial loans are difficult or more difficult through banks who don’t appear to be passing on the advantage the government has given them.
“And the government needs to step in to ensure that these particularly skilled jobs are not lost because once lost they’ll never return.”

The Conservative party are criticising the governments plan as having no substance, claiming they are trying to cover up the fact that the recession policies aren’t working.

Administrators have cut 450 jobs at Woolworths in order to try and keep the business running. These layoffs have been in support operations at the store at Marylebone Road in London, and the branch in Castleton, Rochdale.

The company, which employs over 25,000 people in its shops alone, and up to 5,000 others in related businesses, have not yet had to cut jobs in the shops themselves, or in their distribution centres, though this is expected after the Christmas period is over.

Since its collapse last month, administrators have launched Woolworths ‘biggest ever sale’, which some have criticised as looking more like a closing down sale, but administrators are claiming it was ‘ongoing’.

Prices are currently reduced throughout the store, with toys and greeting cards offering up to 50% discount in order to try to encourage shoppers into the store, and move stock before Christmas.

Administrators are saying that the shop will remain open until after Christmas. Neville Kahn of Deloitte said: “there is continuing interest in the core Woolworths business and the sale will continue whilst potential buyers finalise their plans for the purchase of the business.”  He added that extra staff had been hired in order to deal with the demand.

Nick Bubb, an analyst with stockbrokers from Pali International, has claimed that the company is trying to “get rid of unsold stock and empty shops…It looks a bit like a closing down sale.”

The famous high street store went into administration just over a week ago, on 26th November. Deloitte have taken over and are said to be in talks with numerous different companies that are interested in Woolworths assets.

However, just last Thursday, famous Dragon’s Den entrepreneur Theo Paphitis, pulled out of buying a share in the chain of stores.

It is still believed that supermarket chains, such as Tesco, Asda, Sainsbury’s, Co-op and Poundland are all interested in investing in some of Woolworths main stores.

The recent credit crunch has had an effect on lots of high street stores. Some other stores are trying to entice customers back into shops by sales before Christmas.

Debenhams, and Dorothy Perkins for example, have held a three-day 20% -off sale events that are soon to end.

Also Marks and Spencer has offered two sales in the last month, in what it claims to be an attempt to give shoppers “a helping hand in the run-up to Christmas.”

Prime Minister Gordon Brown has pledged that the government will work hard to ensure that struggling high street store, Woolworths, will remain open over the Christmas period.

He also told reporters that plans were being discussed so as to ensure that employees currently threatened with redundancy will be helped to find more work in the future.

This comes shortly after the most recent blow that the chain of stores has had to deal with recently, as lottery operator Camelot stopped selling tickets to stores.

Camelot declares its decision to suspend trading with Woolworths will become effective immediately, “pending the company finding a satisfactory resolution to its current trading difficulties.”

This means that Woolworths will no longer be selling National Lottery Tickets, scratchcards or process prize claims.

The chain will now be staying open until after Christmas, but there is still concern for the 30,000 employees that the chain currently employs.

The Prime Minister has said that: “the important thing is in the long-run that employees in this company – where the businesses and the shops are not going to stay open in the longer term – can get other jobs quickly.

“That’s why we’re going to move in immediately to give advice to employees in the company.”

Deloitte, the accountancy firm that has been appointed the administrator for the high street chain, has said that it is searching for a suitable buyer for the stores.

Dan Butters from the administrator said that: “In the last 24 hours, we have received expressions of interest from a number of parties for both the retail and wholesale businesses.”

The company did try to sell itself to restructuring firm Hilco, which would have taken the firms debt, but this deal fell through.

Deloitte has promised that though things are bad, it promises that employees will get paid.

Currently, Woolworths has 815 stores and four distribution centres, which employ around 25.000 people. It also owns Entertainment UK, which supplies DVDs to supermarkets across the country, and employs around 5,000 people.

2 Entertain is currently jointly owned by Woolworths and BBC Worldwide. Woolworths is currently trying to sell its 40% stake in this venture to BBC Worldwide.

Woolworths is just one of a few high street stores currently struggling, and analysts predict that worse is to come.

An analyst at Hargreaves Lansdown Stockbrokers has said: “the eye of the storm has moves in from the banks to the retailers.”

Other struggling stores include: MFI, who have also gone into administration.

Computer and Technology outlets, Currie, and PC World DSG International are blaming “tough and volatile” trading environments for their “29.8 million half year loss.

Kingfisher has also claimed that their profits at B&Q had fallen 9%.

Some fear that the ending of Woolworths could spark a price war if administrators try to cut prices in order to move the company’s stock, which could then lead to worse problems for smaller, weaker competing stores.

The Woolworths chain is currently struggling under its £385 million debt.

Its biggest problems started after having to pay cash for goods from suppliers, after trade credit insurers were no longer prepared to insure the suppliers to Woolworths.

The Council of Mortgage Lenders (CML) has revealed that the number of properties repossessed by mortgage lenders rose by 12% in the third quarter of the year.

It has also revealed that the number of borrowers in arrears went up by 8%, and the number of repossession orders made by courts in England and Wales rose by 3% compared to the second quarter of the year.

The figures suggest that things are set to get worse, with more people losing their homes as the country falls into a recession.

Margaret Beckett, Housing Minister, has said that “the Government is taking action to protest the most vulnerable families from repossession… [This includes] a new court protocol to make sure lenders are exploring all avenues before making a claim in the courts, a £200 million mortgage rescue scheme, more free legal representation in county courts, and more free debt advice.”

With interest rates falling, and unemployment rates rising, it is not surprising that so many people are struggling to make their mortgage repayments.

Director General for the CML, Michael Coogan has said that the company still predicts 45,000 repossessions this year, but that trying to predict numbers for 2009 was “premature”.

He also said that it was generally not in the lenders’ interest to repossess properties, and that the Chancellor’s Pre-Budget Report needs to address.
“Conditions in the wider economy suggest a worsening picture for mortgage lenders, however carefully lenders handle their treatment of borrowers in difficulty.”

The CML’s figures also suggest that the buy-to-let market has also become tougher in recent months as arrears for the landlords of such properties are now generally higher than mortgage borrowers.

The CML have explained that: “Reasons include falling rents and an over-supply of rental property in some areas, resulting in some landlords being unable to let their property or achieve high enough rents to support their borrowing commitments…Fraud is also likely to have been a contributory factor.”

Figures also showed that in the third quarter of the year, the number of people behind on their BTL loans were behind by 1.58%, compared to 1.44% of mortgages.

The number of landlords who saw their properties repossessed in the third quarter of the year however, was exactly the same as in the first two quarters.

The CML has warned that this lower BTL repossessions rate is “unlikely to be maintained”.

Also released today were the Ministry of Justice (MoJ) figures, which showed the situation earlier in the repossession process when lenders first go to court for permission to take back a mortgaged property.

Figures for England and Wales shoe repossession claims in the first stage of being processed were 1% lower than in the previous quarter, but overall, 9% higher than the third quarter of last year.

The number of court orders being made by county court judges was up 3% over the quarter, putting them 24% higher than this time last year. However, an agreement is often reached between the lender and the borrower, so many of these cases will not end in repossession.

Chief economist for the Royal Institution of Chartered Surveyors (Rics), Simon Rubinsohn, has said that he doubts that the number of repossessions has peaked just yet. He believes that claims will rise as people lose their jobs and buy-to-let landlords face rising mortgage costs and falling rents.

Even though the number of repossessions is rising, it still does not yet compare to the last property slump in the early 1990’s.

Chief executive of Shelter, Adam Sampson has said that: “lenders may claim they are using repossessions as a last resort, but they must not pat themselves on the back too soon as both repossessions and arrears are still continuing to rise.”

After a 16 year high, UK inflation fell in October, as oil and transport costs, as well as fuel prices, fell.

The Consumer Price Index (CPI), which was at 5.2% in September, has fallen to 4.5% in a month. According to the Office for National Statistics (ONS), this is the biggest month-on-month drop in 16 years.

The Retail Prices Index (RPI) also fell from 5% to 4.2%, its biggest fall since 2003. This index includes house prices, and is often used for agreeing pay settlements, or calculating the up rating of benefits like pensions.

Core inflation, which includes the likes of food, tobacco and alcohol, fell from 2.2% in September, to 1.9% last month.

The ONS has said: “The largest downward pressure on the CPI annual rate came from transport costs where the price of fuels and lubricants fell this year but rose last year… The decrease this year was triggered by a sharp fall in the price of crude oil.”

Other things that may have contributed to the decrease are the fall in prices of both air and sea transport, and from food and non-alcoholic drinks, as the prices of meat were cut in the supermarkets.

The UK economy shrank for the first time since 1992 this year, falling by 0.5% in the third quarter of 2008.

The Bank of England has said inflation could fall below its target of 2% next year, and could even drop as low as 1%.

All of this led to the Bank of England lowering its key Bank Rate in October to just 3% – its lowest level since 1955.

Chief economist at the British Chambers of Commerce, David Kern, said: “Following these [inflation] figures, it is clear that UK interest rates will be cut further, most likely to 2% in early 2009.
“One cannot rule out rate cuts below 2% later next year.”

The slowing UK economy is also pulling down cost-of-living prices, due to falling food and fuel prices. The fact that crude oil is remaining at under $60 a barrel is primarily responsible for decreased fuel prices.

Senior economic advisor to Earnest & Young ITEM Club, Hetal Mehta, has said: “With commodity prices falling and the economy shrinking fast, inflation is going to undershoot the 2% target by the middle of next year.
And while it is still unlikely on the CPI measure, the prospect of deflation cannot be ruled out.”

Figures from the ONS also show that output prices (the prices of food leaving the factory) dropped by 1% in October.

Input prices, on the other hand, (the cost of the raw materials bought by the manufacturer) dropped by 5.6% in October, the biggest drop in 12 years.

The Governor of the Bank of England, has admitted that it’s very likely that the RPI will reach negative percentages next year.

The Bank is also expected to drop its interest rates to 2% in December, its lowest level since the 1930s.

Although a short period of deflation would not be too bad, a prolonged period could be disastrous, as consumers hold off buying goods thinking they will be cheaper later. This can lead to firms selling less and wages being cut, and overall, less money to spend meaning demand falls even further.

Recession in the UK will be longer and tougher than originally suspected according to business group CBI, which estimates that the economy will shrink 1.7% in 2009. This is hugely different to the 0.3% growth that was predicted in September.

The group also believe that unemployment could peak at 2.9million by 2010, compared to the current 1.8 million total.

Lord Mandelson, Business Secretary, defended the government’s plans to increase borrowing in order to try to boost the economy by saying: “We have to take every action we can as a government.”

He also said that the current recession is not the government’s fault, and that it is their job to do everything possible to make the recession “as short and as painless as possible”, adding that “now people will say but you’re resorting to borrowing in order to deliver the stimulus that’s needed. My answer to that is what is the alternative?”

Unite, are said to be drawing up a 10-point plan to invigorate the UK economy. This will include an increase in public spending; a halt to house repossessions; and a call for over a million affordable new houses to be built.

Along with these changes, Unite also want more support for manufacturing, tighter regulations on energy firms’ profits, tighter regulations of the financial sector and increased worker rights along with many more changes they believe will boost our current economic state.

Although the CBI report said that it hoped the recession would be “shallow”, October’s banking sector turmoil suggests otherwise.

Between July and September this year, the UK economy shrank for the first time in 16 years, suggesting we are in a repression, though technically, this can’t be confirmed until the fourth quarter statistics are in, it is expected that the fall in economic growth will continue.

The CBI expects that the economy will continue to contract by 0.8% in the final quarter of the year, and expect the economy to continue to shrink in the subsequent three quarters, before beginning to recover in 2010.

CBI’s deputy director general, John Cridland, has said that problems with the banking system over the last couple of months have sent consumer and business confidence plummeting.

He said that: “given the speed and force at which the downturn has hit the economy, we have reassessed and downgraded our expectations for UK economic growth, 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.”

According to Mr Cridland, the slowdown in the economy is due to a “double whammy”.
“First of all the banking crisis had really deep effects on the availability of credit for business – nor 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.
“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 batten down the hatched.”