Grim and grimmer - the bleak midwinter warning jobsmessage

IT'S grim and it's going to get grimmer. That is the message in the City where the mood at what few parties there have been, has been one of shared sorrow rather than celebration.

Whereas the City is always ahead of the economy and looking to the future, unemployment lags behind. Today's figures relate to the second and third quarters of the year. What's alarming is that this current, fourth quarter, has been awful. In the second quarter there was zero economic growth; in the third it fell by 0.5% and this one is heading for a full 1%. Next year will be much worse - a drop of 2%. What we see now is nothing compared to what is coming. The first few months of 2009 are likely to see a blitz of businesses folding, and huge job cuts. So far, we've not seen many major employers go under but there are likely to be plenty early in 2009. For some retailers a disastrous Christmas will shatter their last hope. In banking, the consensus appears to be that the job losses are just beginning. They do not include Woolworth's - we know they will rise by 35,000 alone when the chain finally closes its doors.

The widely predicted total of three million unemployed for next year looks easily achievable. The Bank of England has cut rates and will do so again. In the US, the Federal Reserve has slashed rates. They're desperate to encourage banks to recommence lending. Against this backdrop, the Government's decision to cut VAT appears even more empty and futile.