Up to 300,000 workers will lose their jobs by 2011, pushing the number of people out of work close to 2 million, a leading business group says today.

The British Chambers of Commerce, which becomes the first business group to forecast that Britain would fall into recession, predicts that the economic slump will force unemployment to soar by between 250,000 and 300,000 in the next two to three years, adding that total unemployment of more than 2 million could not be ruled out. This would take unemployment to the same level as the year that Labour came to power.

The BCC said there was a possibility that the economy would shrink during two quarters before next March, pushing the country into a technical recession. It cut its forecast for economic growth to 1.3 per cent this year and 1.1 per cent next year, down from 1.7 per cent this year and 1.6 per cent in 2009.

The Bank of England is battling soaring inflation as well as the slumping economy. Inflation reached a 16-year high of 4.4 per cent last month, more than double the Bank’s 2 per cent target.

Unemployment hits 2.1 million, 1980

The total of unemployed has reached a post-war record and is growing at the rate of 25,000 a week. Mrs Thatcher said there was no instant solution

Times Archive, 1975: What do the figures really mean?

The simple view that the unemployed could be placed in a category as distinct from the employed as black from white has been smudged. Instead there are several shades of grey

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But David Kern, economic adviser to the BCC, said: “Our view is that the threats to growth are more serious and more immediate than the risks of higher inflation. The UK economy urgently needs an interest rate cut to counter threats of recession.”

The number of people claiming unemployment benefits surged at its fastest rate for 16 years during July, rising by 20,100. The total number of people out of work is 1.67 million, according to official figures.

The threat of job losses will pile more pressure on beleaguered householders. The soaring cost of food and energy has cut families’ spending power by nearly £700 a year, according to a survey for Asda published to-day. Essential items now cost the poorest families an average of £7 a week more than they earn, pushing them further into debt.

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