Scott Reid's Business Blog: Latest job cuts compound the doom and gloom

Published on Thursday 13 November 2008 11:39

NO apologies for this reading like the Blog of Doom.

I've tried to remain upbeat in recent weeks but any optimism has been extinguished by the events of the past few days.

Today's news that telecoms giant BT is axing a colossal 10,000 jobs follows "downsizing" announcements this week from, among others, Virgin Media (2,200 posts), GlaxoSmithKline (over 600 jobs) and Vodafone (unspecified as yet, but the group is looking to slash 1 billion from its operating costs).

Countless others have been trimming headcounts by a few dozen here, a few dozen there.

They all add up.

Trade union leaders estimate that jobs are being lost across the UK at a rate of 1,000 a day.

BT is waving goodbye to over 6 per cent of its workforce despite banking a second-quarter profit of 590 million and improved revenues of 5.3bn.

It would appear that no sector is immune from the economic turmoil triggered by a collapse in the lending market.

How bad will things get?

Well, we're not quite at the lows seen at the start of the 1980s when unemployment hit the three million mark.

That jobless tally currently stands a little north of 1.8 million, a mere 11-year high, after jumping 140,000 in the three months to September.

Analysts fear the three million barrier will be breached in 2010. Given the rate at which the job cuts are stacking up, it's hard to argue against that gloomy forecast.

North of the Border, the highly-regarded Fraser of Allander Institute has outlined a series of scenarios for the Scottish economy over the next two years.

Its best guess is that 50,000 jobs will be lost by 2010. Its worst-case scenario forecasts almost 120,000 posts will go.

Given yesterday's revelation that Scotland's jobless total had soared by 13,000 to 126,000 in just three months, we could be looking at the thick end of a quarter of a million "actively seeking employment" two years from now.

A scenario that would eclipse the UK-wide slump of the early 1980s and certainly that of the early 90s when Scotland actually managed to escape a technical recession.

Back then, we didn't have our major financial institutions facing utter turmoil and racking up severe losses.

Yes, it's hard to grasp anything positive.

Zero per cent interest rates? Pretty cold comfort when you've just been handed your P45.

• Scott Reid is The Scotsman's deputy business editor

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