High street fashion retailers were the first big losers of 2009 as Britain returned to work yesterday to face the worst employment prospects in a generation.

Marks & Spencer will announce massive job losses tomorrow after dire Christmas trading – nearly a thousand posts will go in stores and several hundred more from head office and support functions.

Debenhams and Next are also expected today to unveil their worst Christmas performances in recent history.

Lenders to Mosaic, the investment company that owns a number of high street fashion chains including Principles, Oasis, Karen Millen and Warehouse, have sent in an emergency restructuring team into the business.

The stores employ about 5,000 staff whose jobs will be at risk unless a new lender is found to refinance the business.

Waterford Wedgwood, the china and glassware company, went into receivership yesterday, threatening nearly 2,000 British jobs.

Adams, which went into administration after Christmas, shed another 850 staff by closing all 111 children’s clothing shops and Passion for Perfume, a chain of 46 stores, collapsed with the loss of all 185 staff. The last 197 Wool-worth stores will close today, taking its total losses to 27,000, while Monsoon Accessorize is facing a revolt from suppliers after it asked manufacturers to cut prices by 5 per cent.

Sales over Christmas at Marks & Spencer are thought to have fallen by 8.5 per cent once new stores are taken out of the equation. M&S, which last year made workers’ redundancy packages less generous, has cut investment recently to reduce its £3 billion debt.

Unemployment is now rising at a faster rate than during the 1990s recession. This week’s job news will pile more pressure on the Bank of England to cut interest rates on Thursday from 2 per cent to a 314-year record low.

The dire news from the high street came as Gordon Brown and David Cameron tried to seize the initiative on the economy. The Prime Minister vowed to support and maintain jobs while attacking the Conservatives as “socially divisive” and “economically mistaken”. Mr Cameron announced schemes to relieve pressure on savers. He said that he felt like “shaking the Prime Minister” until he admitted that government plans were failing.

Unions, meanwhile, fear that ministers are dragging their feet over a bailout of the car industry. It is understood that no date has been set for talks despite a formal request before Christmas. Unite said that 70,000 jobs were at risk.

Representatives from the industry, including Jaguar Land Rover, have been discussing an aid package with ministers since October but no details of support have emerged.

Auto manufacturers have been hit by falling sales due to the economic downturn but are also struggling to raise capital because of the credit crunch. They have asked the Government for loans and loan guarantees to stem the losses.

Jaguar Land Rover said yesterday that it had axed 2,000 positions last year. The company, which employs 15,000 people, cut agency and contract workers to reduce its costs. Jaguar has also shut down its factories for a month over Christmas.

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