IMF: UK economy will be hardest hit in worst recession since second world war

http://www.guardian.co.uk/business/2009/jan/28/ilo-global-unemployment-to-soar

Britain's economy will be the hardest hit in the developed world in what is expected to be the "deepest recession since the second world war," the International Monetary Fund said today.

The IMF now expects the UK economy to shrink by 2.8% this year, compared with the 1.3% it was forecasting in November. This is worse than the 2% average drop in output the organisation has estimated for advanced nations.

Global growth is expected to fall to 0.5% this year as the "scale and scope of the current financial crisis have taken the global economy into uncharted waters".

Official figures last week confirmed that Britain fell into recession at the end of 2008. The UK economy slumped by 1.5% in the final three months of the year – worse than expected and sparking fears of a deep and prolonged recession. Over 2008 as a whole, the British economy shrank by 0.7%.

Also today, a United Nations agency warned that more than 50 million jobs could disappear around the world this year. As the global economy battles its worst downturn since the Great Depression, the International Labour Organisation (ILO) said its worst case scenario would see 51 million more jobs lost by the end of this year, taking the global unemployment rate to 7.1% from 6% last year.

More realistically, the organisation estimates that 30 million people could lose their jobs if financial turmoil continues through 2009, pushing the unemployment rate to 6.5%. Under its most optimistic scenario, this year would end with 18 million more people out of their jobs and a jobless rate of 6.1%.

"If the recession deepens in 2009, as many forecasters expect, the global jobs crisis will worsen sharply," the ILO said. "We can expect that for many of those who manage to keep a job, earnings and other conditions of employment will deteriorate."

Developing countries will suffer most, according to the organisation, whose governing structure includes governments, employers and workers' groups.

"Sub-Saharan Africa and south Asia stand out as regions with extremely harsh labour market conditions and with the highest shares of working poor of all regions," the report said.

The ILO estimates that North Africa and the Middle East had the highest unemployment rates at the end of 2008, at 10.3% and 9.4% respectively.

Central and south-eastern Europe and the former Soviet states ended last year with a jobless rate of 8.8%. In sub-Saharan Africa it was 7.9% and Latin America's rate was 7.3%. East Asia fared best of the world's regions at 3.8%.

Most job creation in 2008 came from south Asia, south-east Asia and east Asia, while developed economies and the European Union had a net loss of about 900,000 jobs