We may already be past the worst and the world economy's low point could prove to have been the final quarter of last year. That, at least, is the view of some optimistic economists, including Jim O'Neill, of Goldman Sachs. But it certainly didn't feel that way in Britain yesterday. We faced another grim roll call of potential job losses in sectors ranging from fishfingers and leather sofas to earth-moving equipment and credit derivatives.

The British Chambers of Commerce is warning that the economy is contracting at an alarming rate and unemployment will soar by 1.3 million by the middle of next year.

Strangely, the new Populus poll for The Times shows little increase in people's fears of losing their jobs. This could be good news, in that consumer confidence may hold up better than might be expected. More likely it is bad. When people finally wake up to what is happening, consumer confidence could take another lurch down.

Either way, the Government is quite right to focus on the risk that those who lose their jobs could ultimately join the ranks of the long-term unemployed. Whether the Government's approach to this threat is the right one is less clear. The £2,500 subsidy being offered to employers may encourage some to take on people who have been out of work for six months. But it is hard to see how you avoid throwing money away. How do you stop the subsidy going to employers who would have taken on the staff anyway? How do you stop it going to employers who pocket the cash and then go bust?

The BCC points out the irony that the Government is introducing job subsidies at the same time as promising an increase in National Insurance, a tax on jobs. It would clearly be better if companies did not cut jobs in the first place and the BCC suggests a return to an old Thatcherite scheme that subsidised wages for workers who had their hours cut. Yet there is some debate over how effective this scheme was. More promising is the idea of subsidising training for employees who would otherwise be let go.

It would be better still if the Government moved quickly to tackle the lack of credit and credit insurance that lies behind many of the job losses. JCB yesterday claimed that its customers' inability to get credit to buy new diggers was key in its decision to cut 700 jobs.

The longer the Government waits, the more jobs will be lost.

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