Britannia Radio

OECD warns global jobless to rise by 25 million

Some 25 million people around the world stand to lose their jobs as a result of the economic crisis, the head of the Organisation for Economic Co-operation and Development has warned.

 

By Edmund Conway, Economics Editor
Last Updated: 6:56AM GMT 23 Dec 2008

Angel Gurria, who heads up the Paris-based institution, also blamed "a truly scandalous failure" of regulatory supervision for the crisis and urged European countries to spend more Keynesian-style plans to boost their economies.

Speaking to French radio, Mr Gurria said that the scale of the rise in unemployment worldwide would be almost unprecedented as the recession takes hold.

He said: "We're heading for a loss of between 8m and 10m jobs in the OECD area... and 20m to 25m in the world as a whole between now and 2010."

The OECD, which represents the world's richest nations, was among the first of the major world economic institutions to warn that the UK faces recession. Most economists now expect the jobless total in Britain to rise by more than a million, with some anticipating that it will rise from its current level of 1.8m to around 3m by the end of next year.

Mr Gurria said the construction sector would be particularly affected, since activity there had "stopped in a brutal way," with Ireland and Spain affected more than many others.

The International Labour Organisation said that it expects the global unemployment toll to rise by 20m to a record high of 210m by late 2009.

Mr Gurria's exhortation to rich European economies to spend more on stimulus packages is equally significant. Prime Minister Gordon Brown has come under fire both from the Conservatives and from German finance minister Peer Steinbrück for cutting VAT from 17.5pc to 15pc in an effort to avert a severe recession. However, Mr Gurria said that the European Union should "go beyond" the fiscal stimulus packages that had already been announced, equivalent to 1.4pc of gross domestic product, saying: "all the other major countries are going beyond that."

He also urged the European Central Bank to cut interest rates further. The US Federal Reserve has reduced its own borrowing costs to just above zero. Many economists have warned that the ECB's apparent reluctance to follow suit could consign Europe to a far longer-lasting recession, as well as keeping the euro painfully high.

Mr Gurria said that the rich world nations would remain in recession for most of 2009, adding: "We predict a recovery at the end of 2009 and weak growth in 2010."

He added that in the build-up to the crisis there had been "a truly scandalous failure of regulation... and supervision". It came after Sir John Gieve acknowledged that the Bank of England had underestimated the scale of the financial crisis.