Increasing redundancies

The unemployment figures confirmed a flood of redundancies as banks pull credit lines, forcing companies to take cost-saving measures.

The organisation's measure of unemployment, which includes those seeking work but not claiming unemployment benefits, rose to 1.923 million, the highest since September 1997, just after the ruling Labour party took office.

Philip Shaw, an economist at Investec, a specialist banking group, said: "The rise in unemployment is absolutely awful. There's little doubt whatsoever that the labour market is loosening, and loosening very quickly."

The ONS said that government borrowing in December was $20.5bn (14.8bn sterling), the second highest level after November, since monthly records began in 1993.

It took total borrowing in the current financial year to $97bn, more than double its level at the same point last year and the worst since records started in 1946.

As it strives to refloat the economy via extra spending and tax cuts, the government has already pencilled in public sector net borrowing of about $165bn next year and analysts say that figure is likely to climb.

Meanwhile, Britain's council of mortgage lenders said on Wednesday that gross mortgage lending fell 47 per cent on the year in December to reach its lowest monthly level since April 2001.