The TUC is today (Thursday) calling on the Bank of England to cut interest rates and urges employers to treat redundancies as a last – not first – option in response to the economic impact of the terrorist attacks in the US.

A TUC economic analysis, World recession or recovery? released today (Thursday) says the future of the UK economy depends heavily on consumer confidence and labour market stability.

It argues the corporate sector has a responsibility for maintaining both by showing restraint over redundancies. World recession or recovery? says that as long as employers and the markets do not overreact, the UK will face a ‘soft landing’ rather than full blown recession.

The report predicts:

• the eurozone will avoid recession but growth will be low – no more than 1.5% to the end of this year and 2% in 2002. UK growth will be better than the European average – 2% this year and 2-2.25% in 2002.
  
• consumer confidence in the UK will not be dented as much as in the US, partly due to continued wage growth, but employer support is critical to maintain it.
  
• UK manufacturing is in recession now and will struggle to recover next year.

The TUC wants:

• the Bank of England to cut rates by at least 0.25% to sustain demand and to take some pressure off manufacturing. In future there should be more active co-ordination between the Bank, the ECB and the Federal Reserve to make sure Europe and the US are pulling in the same economic direction.
  
• an urgent review of existing industrial and regional support provision to deal with the immediate jobs crisis in aviation and related industries and manufacturing more generally
  
• the government should stick to current spending plans and allow public borrowing to rise to pay for increased public investment.

TUC General Secretary John Monks said: “Employers should not bow to the demands of the city and should treat redundancies as the last rather than the first option. With manufacturing already in recession, our economy is heavily reliant on continued consumer spending and a stable labour market. Employers can and should help build confidence by considering redundancies as a last option – not the first.

“A further cut in interest rates today is key to building confidence and helping the beleaguered manufacturing industry.”