Signs that Britain faces the worst recession in more than 20 years were confirmed by a collapse in the value of the pound, a sharp drop in the value of shares, and reports of a dramatic drop in demand by British manufacturers.
On Monday the pound suffered its worst one-day drop against the dollar since the 1992 crisis in which Britain was forced to withdraw from the Exchange Rate Mechanism. On the same day the FTSE 100 index of shares lost more than 5 percent of its value.
But for many people, the most alarming news of the week came from reports by manufacturers’ organisations. The industry body EEF predicted that the rapid economic slowdown would cost 90,000 jobs in 2009.
Meanwhile the Purchasing Managers’ Index, which measures the health of the construction and manufacturing industries, fell to its lowest level since its foundation 16 years ago.
Figures for last month show a slump in output, with collapsing demand in Britain’s home and export markets – in just three months it fell by eight percent. Recessions of the 1970s and 80s saw falls in the order of five to six percent.
The motor vehicles industry illustrates the scale of the collapse most sharply.
Luxury car firm Aston Martin this week became the latest to announce job cuts, slashing a third of its workforce and closing down production for a month over Christmas.
Ford, which has already shed thousands of jobs, said it plans to sell its Volvo subsidiary, threatening the future of the Bridgend engine plant that the Welsh Assembly only recently agreed to help re-tool.
As in previous recessions, South Wales has been badly hit. Job losses announced there last week will see an extra 2,600 workers facing Christmas on the dole.
After going into receivership the Budelpack COSi cosmetics factory in Maesteg closed, making 263 workers unemployed.
They were offered no redundancy payments by the receivers, just an information pack on how to claim what they are owed from the government.
Budelpack worker Susan O’Brien, who lives in Maesteg, said, “The way they have treated us is disgusting.
“I have been here for 20 years and I’m not going to get a penny in redundancy money. They can’t do this to us.”
Adding to the problem of job losses is the growing threat of home repossession for those who fall behind on their mortgage payments – with the number expected to rise to 45,000 this year.
The state-owned Royal Bank of Scotland this week promised a six-month delay before it would seek to repossess its customers’ houses. However, the other main banks have so far refused to match even this limited commitment.