Economy: Minister warns of serious downturn

PETER MANDELSON gave a gloomy prediction of a "serious downturn" of the economy yesterday, warning that there would be "inevitable job losses as a result in the coming years".

The Secretary of State for Trade and Industry said the question was "how much Britain will suffer as a consequence" and how "we can withstand the consequences", as official figures from the Office for National Statistics published today are expected to confirm that unemployment has risen.

The two sets of statistics showing the number of people claiming benefit and a wider measure detailing how many people are out of work are both likely to rise.

Speaking during an Opposition-led debate on the decline in manufacturing industry, Mr Mandelson said he wanted to make Britain a knowledge- driven society to increase levels of productivity at a time when confidence was "fragile" in British business.

"We will only succeed if we create open, competitive markets. If we create and exploit knowledge, including our science base. If we can upgrade skills and spread knowledge of best practice in business," he said. But he went on to accuse the Tories of "absolutely crying out" for recession because it was "their only route to political salvation".

Addressing problems in the global economy, Mr Mandelson added: "No one disputes that this is a serious economic downturn. There will be inevitable job losses as a result in the coming years. The question is how much Britain will suffer as a consequence and how we can withstand the consequences."

He insisted that almost all forecasts supported the figures of the Chancellor, Gordon Brown, of modest growth next year.

"Amidst all the present pressures, it is vital top realise that we can talk ourselves into a greater showdown than is necessary," Mr Mandelson said.

Earlier in the debate, John Redwood, the Tories' trade and industry spokesman, branded Mr Mandelson the "minister for manufacturing recession" and "minister for factory closures".

He accused him of "turning a blind eye" to the problems facing British business and understanding nothing about them because he had "never worked in business" himself.

The Government, he added, had made it "too dear to make things in Britain" by raising business taxes and increasing the regulatory burden. Mr Redwood said: "The productivity problem is not of industry's making, it is of the Government's making. They are the ones that are bleeding industry dry by taking the money out of industry's tills and coffers and putting it into the Treasury or administration."

Since coming into power last year, the Government had transformed the UK from being the number one place for new investment for multi-national companies to being the number one place for closure.

"Now there are some problems in the world economy. Where do they turn to dismiss their staff and close their factories first? They turn to the UK because they know it is in the UK where the [business] climate has deteriorated most dramatically."

He said Mr Mandelson had likened himself to John the Baptist. "John the Baptist was closer to being an atheist than you are to understanding British manufacturers. You haven't invited business to a baptism but a funeral."

David Chidgey, the Liberal Democrats' trade and industry spokesman, accused Mr Mandelson of complacency towards the crisis faced by Britain's manufacturing industries.