Fifty thousand people in Scotland could lose their jobs over the next two years as recession hits, economists predicted today.
Fifty thousand people in Scotland could lose their jobs over the next two years as recession hits, economists predicted today.
A "rapidly deteriorating situation" is causing the effects of the economic downturn to be felt harder in Scotland than in the rest of the UK.
The warning comes as total unemployment over the last three months in Scotland now stands at 126,000, a steep rise of 13,000 on the previous quarter.
On the more traditional method of calculating unemployment - counting the number of people claiming jobseekers' allowance - the figure has also gone up.
This total increased by 3,300 in October to 85,400 - a rise of 12,800 on October last year.
The latest forecast from the Fraser of Allander Institute said "exceptional" losses facing Scottish banks RBS and HBOS will have a lingering impact on many sectors.
The institute said recession was likely in 2009, with negative GDP growth at -1.1% before picking up the following year to 0.7%.
Estimates suggest 37,000 job losses next year, with a further 12,000 in 2010.
The scale of the downturn is not likely to be as severe as the 1980/81 recession however.
The commentary published today is backed by PricewaterhouseCoopers LLP.
Senior partner in Edinburgh, Paul Brewer, said: "The latest economic forecast points to a rapidly deteriorating situation for many sectors of the Scottish economy.
"Combined with a backdrop of impaired lending capacity on the part of our two major clearing banks, it indicates there are significantly heightened risks for business.
"Just as bankers, economic forecasters and governments underestimated the speed and severity of the financial crisis and how quickly it has affected the wider economy, many companies may not yet realise how quickly their trading position could worsen in the current climate."
The Fraser of Allander Institute, based at the University of Strathclyde, said the impact of falling property prices will be felt less in Scotland than in the rest of the UK, but the fall-out from struggling banking and financial services is likely to be greater.
The economists' report and unemployment figures were published as Registers of Scotland revealed the number of house sales is falling sharply in Scotland, with house prices falling in many areas.
Across Scotland house prices rose by just 0.1% from July to September but prices fell in Aberdeen, Dundee, Glasgow and some other areas, although in Edinburgh they went up by 0.2%.
Commenting on the unemployment figures, Scottish Secretary Jim Murphy said: "Economies all over the globe are facing challenging times, and the Scottish labour market is not immune.
"The Scottish economy has enjoyed a sustained period of success but we can't afford to assume this will continue, and it's essential that we don't wait for someone to lose their job before we start to help but get the ball rolling before it happens."
The Government is to double the funding for its "rapid response" service and Mr Murphy said this will be offered in areas of Scotland that could be hit with redundancies.
He listed other moves, like the bank rescue package and housing support and energy efficiency - "and we continue to invest in the New Deal to help people find new jobs quickly if the worst should happen."
On today's figures, the Scottish unemployment rate over the last three months rose by 0.5% to 4.7%, although the UK rate is higher at 5.8%.
Calculated on the monthly claimant count method, the rate went up by 0.1% to 3.1% UK-wide unemployment reached an 11-year high today when another huge increase in the numbers looking for work edged the total closer to the two million mark.
Official figures for the three months to September showed that 1.82 million people were out of work, an increase of 140,000 from the previous quarter.
It was the highest figure since the end of 1997 and confirmed the fears of unions and analysts that the politically-sensitive two million mark would soon be breached.
The number of people claiming jobseekers allowance rose by 36,500 last month to 980,900, the highest figure since the spring of 2001 and the worst monthly increase since 1992.
Today's grim figures do not take into account recent job loss announcements, including news of more than 5,000 cuts yesterday by firms including Glasgow-based Thus, Virgin Media, Yell, Taylor Wimpey and GlaxoSmithKline.
The unemployment rate is now 5.8%, the highest since early 2000, while the number of people looking for work has jumped by 182,000 over the past year.
The number of unemployed men was 1.07 million, up 85,000 over the latest quarter, while 55,000 more women joined the ranks of the unemployed, up to 750,000.
Meanwhile, interest rates could tumble to record lows next year as policymakers fight to ward off a severe recession, the Bank of England signalled today.
Based on market expectations of rates before the Bank's dramatic 1.5% cut to 3% last week, its forecasts show inflation falling to less than half its 2% target as food and energy prices fall back and demand eases in a looming slowdown.
Before the Bank's mammoth cut last week, markets assumed rates would fall to around 2.75% by the end of next year. Many experts now predict rates tumbling below the all-time low of 2%, and the Bank's forecast offers support to this view.
The Bank predicts the economy could contract by around 2% by early next year before recovering in late 2010 unless rates fall further.
