The recession is now of a scale that dwarfs the early 1990s and could leave Britain's economy permanently scarred as dynamic private companies abandon the UK, a leading business lobby has warned, reports The Telegraph .
It is fast emerging that December was one of the worst months ever recorded for the British economy, with the British Retail Consortium reporting an unprecedented fall in retail sales, while business output and housing market activity dipped to new troughs.
The British Chambers of Commerce reports a "frightening deterioration" towards the end of the year, in its quarterly economic survey, published today. It said that the manufacturing and service sectors recorded their worst output since comparable records began two decades ago.
"The sheer scale of this comes as a surprise to many of us," said BCC director general David Frost. Urging the Government to implement "more imaginative" measures to end the crisis, including further fiscal stimulus and quantitative easing, he added: "The concern must be about what we are going to have at the end of this. If we are to climb out of this morass we will need a strong business base."
MERRILL LYNCH AND Bank of America, its new owner, are preparing to cut about 1,900 staff in London - one of the biggest single staff reductions in the history of the City, according to The Times.
Staff at Merrill have been told that management is looking to cut 30 per cent of the combined workforce in the capital. Some were asked to reapply for their jobs last week.
Cuts have already begun in some departments, with job losses in the commodities trading department in the past few days, but the major reductions are still to come, with most of the cuts due to be completed by March.
Sentiment in the dealing rooms has been at rock-bottom since December when BoA said that it was looking to shed 30,000-35,000 people worldwide, between 11 per cent and 13 per cent of the combined workforce, over three years. It is aiming to achieve annual cost savings of $7 billion.
ROYAL BANK OF SCOTLAND was forced to reveal yesterday that it has lent $3.47bn (£2.34bn) to Lyondell Chem-ical, the bankrupt US chemicals com-pany. Analysts warned that RBS, the biggest lender to Lyondell, was at risk of losing a sizeable proportion of the money, says The Independent.
RBS inherited the loans from its ill-fated acquisition in 2007 of ABN Amro's investment bank. The loans are thought to include $1.6bn worth of lower-ranked credit that could lose all of its value. ABN Amro is listed as Lyondell's biggest secured creditor in documents filed in the US bankruptcy court in New York.
The potential loss is the latest banana skin for RBS linked to the £10bn ABN Amro deal. RBS's pursuit of the Dutch bank during the financial meltdown helped to seal the fate of Sir Fred Goodwin, who quit as chief executive late last year. Last month, RBS revealed it could lose £400m from Bernard Madoff's alleged $50bn fraud in the US because of deals done by ABN.
RBS has signalled that it will make its first annual loss in 2008 after taking massive losses on assets such as structured credit and leveraged loans. In the first half, the bank booked £5.9bn of losses, about a third of which came from ABN Amro.
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