- GM Removes CEO Henderson; Whitacre is Interim Chief
- Who Were the Biggest Winners And Losers This Year?
- Look Ahead: Markets Count Down to US Jobs Report
- GE, Comcast Complete Deal Over NBC Universal: Source
- US May Raise Rates Before Jobs Recover: Fed's Plosser
- Cramer: Watch Tech Stocks Wednesday
- Stocks Likely Don't Need Santa to Keep Rally Going
- Super Fantasy Christmas Gifts of 2009
- Larry Kudlow's Open Letter to Tiger Woods
- Unemployment to Peak at 10.5%: Moody's Economist
- 8 Stocks to Gain on Obama's Afghan Plan: Analysts
- BofA On Proposed Changes In The Housing Bailout Program
- The Future of The Media Landscape
- November Auto Sales Muddle Along
- Busch: What Obama Won't Say Tonight
- Stick with Equities—Avoid Emerging Markets: Laszlo Birinyi
- Pfizer Chomps On A Carrot
- Predictions 2010: Technology
Text Size 
Britain will suffer its sharpest economic contraction in almost two decades next year and the number of people out of work could rise to nearly 3 million by 2010, the Confederation of British Industry said on Monday.
 |
CNBC.com |
The global economy is suffering its worst financial crisis in 80 years, with governments around the world injecting trillions of dollars into the banking system to keep it afloat.
"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," said John Cridland, CBI deputy director-general.
"The banking system has come under immense strain, sending consumer and business confidence plummeting in its wake."
The CBI said it expected unemployment to reach 2 million by the end of this year and rise to 2.88 million, or 9 percent of the workforce, in 2010 -- the year by which the ruling Labour Party must call a general election.
That would be the highest jobless total since the last quarter of 1993. Official figures released last week showed British unemployment rose to its highest since 1997 in the three months to September, with 1.825 million people out of work.
The CBI said a deteriorating labour market and weak consumer confidence would weigh on household spending. It predicted household consumption would contract by 1.8 percent in 2009.
For Investors
"This latest forecast shows that 2009 is going to be a very tough year for business, with the sharpest fall in GDP since 1991," said Ian McCafferty, the CBI's chief economic adviser.
Reduced spending and falling commodity prices will ease price pressures, the CBI said, predicting the inflation rate would fall to 1.7 percent by the end of next year from 4.2 percent last quarter.
According to its forecasts, inflation could drop as low as 1.1 percent in 2010, well below the Bank of England's 2 percent target. That will give the central bank room to reduce interest rates further, possibly to as low as 1.5 percent, the CBI said.
The Bank of England this month slashed interest rates by an unexpected 1.5 percentage points, taking them to 3 percent.
The CBI predicted fixed investment would fall by 3.8 percent in 2008 and by 10.5 percent in 2009 as firms would be hit hard by slowing demand and difficulties in obtaining credit.
Print
Email
- Will the Fed raise rates? Will the dollar continue its slide? CNBC experts weigh in on the year ahead.
- Goldman Sachs has forbidden employees from gathering in private holiday parties of 12 or more.
- Do you have what it takes to run your own business? Ask yourself these questions.
- Heavily armed pirates in Somalia have set up a sort of stock exhange to fund their hijackings.
- Since its launch in 1998, Google has become a primary force on the Internet. How much do you know about the company?
- A famed author has written all his work on an old typewriter that is now up for auction. The NYT reports.
Data is a real-time snapshot *Data is delayed at least 15 minutes