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date: 22 June 2009

embargo: 00.01hrs Tuesday 23 June 2009

More like the 1980s recession than the 1990s, says TUC

This recession is more like the deep 1980s recession than the more shallow 1990s downturn with unemployment rates rising much faster than in the 1990s, a reopening of the regional divide in unemployment and a steeper fall in output than the 1990s, says the TUC today (Tuesday).

The TUC's latest recession report uses official figures to compare the current recession with those of the 1980s and the 1990s. It concludes that:

• While last week's unemployment figures may not have been as bad as some expected, analysts who found them encouraging were over-optimistic as the gap between numbers losing their jobs and those finding new ones is greater than at any time during the 1990s recession.
• Looking at the first four quarters of rising unemployment during each recession, the TUC has calculated that the rate of unemployment has increased faster during this recession (30 per cent) than in the 1990s recession (22 per cent) and the 1980s recession, when the rate of increase was 29 per cent.
• If we repeat the patterns of previous recessions it could take around three years before the economy is back to where it was before this recession started.
• The decline in GDP for this year is predicted to be around 3.8 per cent. Over the entire 1990s recession there was a 2.5 per fall in growth, and over the full course of the 1980s downturn the economy shrank by 4.6 per cent. While we only have predictions for the rest of this recession, analysis suggests that we are almost certain to experience GDP declines closer to those of the 1980s than the 1990s.
• Contrary to early suggestions that this recession would hit the whole country equally, unemployment is growing more than twice as fast in some regions than in others.

The biggest quarterly gap between those starting to claim unemployment benefits and those leaving the claimant count in the 1990s recession was 78,700, yet between Q4 of 2008 and Q1 of 2009 the difference was 91,900.

The TUC report shows that while the roots of the recession may lie in the City of London, unemployment is increasing much faster in other regions. For example, in the North East claimant count unemployment has gone up from 3.9 per cent of the workforce to 6.4 per cent - up 2.5 percentage points. In London it has gone up 1.1 percentage points - from 2.7 per cent to 3.8 per cent. Both Wales and the West Midlands also have increases of 2.3 percentage points, more than twice that of London. These large variations relatively early in the likely period of unemployment growth suggest that we may see the re-emergence of large regional variations in unemployment rates, which had shown decline in recent years.

TUC General Secretary Brendan Barber said: 'The Chancellor is likely to be right when he says that this is the worst recession for 60 years. The picture for jobs and growth is already bleaker than the last recession, and is looking much more like the deep recession of the 1980s every day.

'Contrary to some commentators, there are no signs that the outlook for unemployment is starting to improve. The difference between the numbers of people losing their jobs and finding new ones is already much worse than in the Nineties recession. And even when the economy does start to grow again, unemployment will carry on increasing for a good while to come - until at least the end of next year.

'This recession would have been very much worse if the Government had not taken prompt action to stop financial melt-down. But with almost the whole world in recession, poor markets for exports and consumers, companies and the finance sector mired in debt, recovery is not be going to be quick or easy.

'Ministers should beware talk of green-shoots. Those trying to avoid the reforms we need to stop another finance boom have a vested interest in saying nothing much needs to be done.

'And even if this is not a false dawn, action will be needed for the foreseeable future to help the unemployed, create jobs and rebalance the economy away from finance towards other sectors, particularly to build a low carbon economy. Top of the list must be action now to help the long-term unemployed and the thousands of school and college leavers about to hit the labour market.

'This is undoubtedly a deep recession, but the right government action can still make it shorter and less severe. The wrong policies - such as big cuts in public spending - will make it worse.'

NOTES TO EDITORS:

- The TUC's latest recession report is available at www.tuc.org.uk/extras/junerecessionreport.pdf

- Comparing the recessions of the 1980s, 1990s and now will be the subject of a lunchtime seminar at the TUC's Congress House on Tuesday 30 June between 12 and 2pm. The main speaker will be labour market academic Paul Gregg from Bristol University who will compare the different recession policy responses of governments over the three decades.

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

- Congress 2009 will be held at the BT Convention Centre, Liverpool from Monday 14 September to Thursday 17 September. All applications for media passes must be received no later than noon Monday 7 September. Any applications received after this date will be processed in Liverpool and subject to a £50 administration fee. The form for media credentials, plus information on how to book wireless internet access and a phone line at the BT Convention Centre can be accessed at www.tuc.org.uk/mediacredentials

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk

Press release (1,000 words) issued 23 Jun 2009