TUC warns of jobs impact of economic contraction

The contraction in the UK economy of 0.5% in the last quarter of 2010 will have a severe impact on the jobs market and make the deficit more difficult to close, the TUC has warned.

According to the Office of National Statistics (ONS), December’s bad weather was partly to blame for the contraction, but the ONS said that even without this disruption the gross domestic product (GDP) would still be showing “a flattish picture”. The decrease in GDP follows a 0.7% increase in the previous quarter.

General secretary of the TUC, Brendan Barber, argued: “When this collapse works its way into the jobs market the impact will be severe.

“To implement drastic spending cuts when every sector, bar production, is in decline will hit business, send unemployment spiralling and make closing the deficit more difficult, not less.”

He also said that the figures underlined the need for the Government to develop a strategy for economic growth, adding that the Confederation of British Industry’s Richard Lambert was correct to identify this issue in his speech yesterday (Monday).

Chancellor George Osborne has defended the Government’s cuts despite the economic contraction. He said: “These are obviously disappointing numbers, but the ONS has made it very clear that the fall in GDP was driven by terrible weather in December.

“However, it would be disastrous to change a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis. We will not be blown off course by bad weather.”

The Recruitment and Employment Confederation’s chief executive, Kevin Green, suggests that the economic outlook may not be as bad as it appears: “The economy is still predicted to grow by just over 2% during 2011 but while this won’t drive huge job creation it will be enough for the jobs market to remain positive.

“However, this does clearly show that the Government must do more to stimulate growth and job creation. The one million young people not in work or education is a critical issue that must be addressed quickly to avoid a lost generation.”

For information on the prospects for 2011 pay awards watch the XpertHR outlook video with pay and benefits editor Sheila Attwood.

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