"The British economy is set to suffer its worst year in three decades in 2009, contracting by as much as 1.7 per cent, according to new forecasts from the CBI.
The gloomy forecast marks a sharp change in sentiment at the CBI where only two months ago its economists were predicting positive growth of 0.3 per cent for next year.
The business group also believes Britain is on course to hit its highest rate of unemployment for 15 years in early 2010, with 2.9 million people, or 9 per cent of the workforce, expected to be out of a job.
Owing to the shrinking economy, the CBI expects a sharp fall in inflation over the coming months, leaving the Bank of England greater flexibility to make further interest rate cuts. After an unexpected 1.5 percentage-point cut in the Bank rate at the start of November, rates are at 3 per cent. However, the CBI believes they may fall as low as 1.5 per cent over the coming months.
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"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. An unwelcome consequence of the downturn will be a significant loss of jobs, many of them in sectors that have been relatively insulated until now."
Unemployment hit 11-year highs of 5.8 per cent during the third quarter of the year. However, if jobless numbers peak at 9 per cent, it will still be a lot lower than previous recessions. In the last recession, during the early 1990s, unemployment peaked at 10.9 per cent, while in the early 1980s it surpassed 12 per cent."
A good old fashioned Labour economic collapse is on course to exceed the previous ones, but this one will be different as the BBC and Gordon Brown will continue to claim that the fault lies elsewhere, anywhere but at the feet of the Prime Minister. The trouble is that there are enough ill-educated, state supported people who might just buy this crock and continue to tribally vote Labour.
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