Unemployment to peak as recession looms

Mr Purnell claimed the UK is facing unemployment on a scale not seen for more than a decade, and warned that the government would be powerless to intervene and save jobs.

His gloomy analysis came after the first admission of a government minister that Britain is heading for recession.

Tom McNulty, the new work and pensions minister said yesterday that the success of the government's recent attempts to stabilise the banking system “will be the precursor to how deep and long the recession will be”.

“We're slowly getting to a stage where the slowdown may well turn technically into a recession and then we'll be talking about the nature and depth of the recession,” McNulty added.