Brown warns of unemployment rise

Gordon Brown warned of the increase in unemployment as he defended plans to increase government borrowing due to the recession. He also confessed the downturn will further increase unemployment, telling business audience in London that the government is now focused on finding new jobs to the unemployed.

"I can't promise people that we will keep them in their last job if it becomes economically redundant," he said. "But we can promise people that we will help them into their next job."

Lord Mandelson warned about the scale of the problems. "We are facing an unparalleled financial crisis, I don't think yet people have realised what the impact is going to be on our real economy, on businesses and jobs back home."

The government is continuing to focus on measures to help small businesses. Alistair Darling, the chancellor, and Lord Mandelson are expected to meet with the European Investment Bank to set out plans with the aim of helping smaller companies by offering small loans. Mr. Brown said to do "whatever is necessary" to ensure that banks increases its lending. He also defended the use of fiscal stimulus to "help people through difficult times", as "the responsible course of government is to invest at this time to speed up economic activity".

Business were reluctant to an increase short-term spending and borrowing. John Cridland, deputy director-general of the CBI employers' body, said: "We will look closely at any new Treasury plans when they appear, but actions to alleviate recession must be carefully targeted to ensure that the benefits outweigh the cost to the taxpayer."