British Prime Minister Gordon Brown will today pledge £500 million to encourage hiring and counter rising unemployment amid the deepest recession in almost three decades.
Meeting with business and union leaders, Brown will offer as part of the plan £2,500- payments to employers to recruit and train those who have been unemployed for at least half a year, the Department of Work and Pensions said.
“Because the risk of long-term unemployment increases as skills and confidence depreciate, we are today setting out a new guarantee of intensive support for anyone still unemployed after six months,” Mr Brown will say, according to the text of remarks released by his office.
Mr Brown’s proposal follows a £20 billion package of mainly tax cuts he announced in November and mirrors European counterparts in pushing new stimulus as the economic slump deepens.
German Chancellor Angela Merkel is planning a €100 billion fund for companies after pushing a €50 billion-euro package of tax cuts and loans last year.
Today’s meeting on tackling joblessness comes a day after Mr Brown and Chancellor of the Exchequer Alistair Darling met Britain’s top bankers to discuss reviving lending.
Barclays chairman Marcus Agius, Standard Chartered chairman Mervyn Davies and Lloyds TSB Group chief executive Eric Daniels were among those who lunched with the two at Chequers, the prime minister’s country residence.
The British economy may shrink by 2.9 per cent s year, the steepest contraction since 1980, with as many as 2 million people claiming unemployment benefits, according to the Centre for Economics and Business Research.
Joblessness rose at the fastest pace since 1991 in November to 1.86 million and banks, retailers and manufacturers across the U.K. have announced plans since then to reduce staff further.
“We will do everything we can to prevent the global recession turning into a global depression, prevent short-term unemployment turning into long-term unemployment,” Mr Brown will say.
The British Chambers of Commerce said that training, wage subsidies should all be considered in its effort to reduce unemployment. It also criticized his plan to increase employer social charges, known as National Insurance contributions, starting in 2011.
“The government should abandon plans to tax job creation,” its director general, David Frost, said in a statement. “We must learn the lessons from previous recessions and ensure that new solutions are found to problems of large- scale unemployment.”
Bloomberg