Prime Minister Gordon Brown promised steps to create up to 100,000 jobs and a renewed effort to spur bank lending as he seeks to cushion the British economy from its worst slump in more than a decade, Bloomberg reported.
Brown said the government will spend the next days in talks with banks to find ways for them to extend more credit to companies. He told the Observer newspaper that a government- funded public works program would create jobs in high-tech and clean energy industries.
"We are going to act in the way previous governments didn't to make sure that through this downturn people are protected and where we can do so creating jobs and where can do so helping people sustain their mortgages," Brown told British Broadcasting Corp. television.
Unemployment rose at the fastest pace since 1991 in November and the extra jobs targeted by Brown wouldn't equal the rise in unemployment in the three months through October. Brown said banks must extend loans to prevent small companies closing their doors and firing workers.
After almost 16 years of continuous growth, the U.K. economy contracted 0.5 percent in the third quarter, and the Bank of England predicts it will shrink 1.3 percent in 2009. Policy makers cut the key interest rate by a percentage point to 2 percent last month after a 1.5 point reduction in November.
The number of jobless Britons rose 137,000 in the quarter through October to 1.86 million, the highest since December 1997, the year Brown's Labour Party took office, based on International Labor Organization methods. The unemployment rate climbed to 6 percent, the most since June 1999, from 5.5 percent in the previous period.
A spokesman in Brown's Downing Street office said the jobs program will provide workers for school repairs, new rail links, hospital projects, and investments in wind and wave energy. Money to finance the program will be drawn partly from reserves, the Observer said, citing the Prime Minister.
The Prime Minister is also due to host a meeting with ministers and employers from manufacturing and retail companies on Jan. 12 to find ways to get the unemployed back into work or retrained, the spokesman said.
The measures are the latest effort to spell out a choice for voters as Brown positions himself for an election that must be held no later than June 2010. He accused David Cameron's Conservative Party of offering too little help to soften the impact of the recession.
These are "headline grabbing announcements backed by very little substance," Conservative lawmaker Chris Grayling told BBC radio today. "It's all about spin and not about substance at all."
Meanwhile, Brown repeatedly dismissed that he is planning to call a vote this year, saying his focus is on steering the country through the current crisis.
As part of that effort, Brown this week will meet representatives from Britain's regions to discuss steps that can be taken at a local level to mitigate the economic slump, his office said today. He also will spend three days in the week visiting the East Midlands, northwest England and Wales. His Cabinet will convene in the northwest, the second time it has met outside London since October.
Chancellor of the Exchequer Alistair Darling in November pledged 20 billion pounds ($29 billion) of tax cuts and spending to prevent the recession from turning into a deep and protracted slump.
Today, Darling rejected that he is considering a fresh injection of state funds to bolster banks' balance sheets.
"Recapitalization is not the first port of call, but over the next few weeks we will continue to discuss what measures are needed," Darling told BBC radio today. "Lending is not taking place at a level I would like to see."
Banks continue to ration loans for companies and households even after the government promised 50 billion pounds to bolster their capital.
Brown today said he will continue to seek ways for banks to increase lending.
"The small business issue and the jobs in small businesses, that is a bank funding problem, and we have got to solve that problem over the next few weeks," Brown told the BBC. "That is what we are urgently talking with the banks at the moment."
