UK downturn 'not as bad'

THE economic downturn in Britain is 'nowhere near' as bad as the early 1990s recession, but the government must do more to help if it is to stand any chance of staying in power, the Trades Union Congress said on Saturday.
Britain's unions descend on the seaside city of Brighton this weekend, angry about sub-inflation pay deals in the sprawling public sector and worried about the impact on families of rising living costs and an economic slowdown.

However, with polls suggesting the ruling Labour party could face defeat in the next election due by 2010, unions are wary of kicking up too much controversy before a political conference season which could decide Prime Minister Gordon Brown's fate.

'There's clearly a danger that we could go into a recession,' Mr Brendan Barber, head of the umbrella TUC group, told reporters in London.

'(But) in terms of what the economy means for ordinary people, clearly at the moment we are nowhere near the scale of the difficulties that we had during the period of the most recent Conservative government,' he said, referring to the early 1990s downturn.

Britain's economy failed to expand in the second quarter and is now expected to shrink as the housing market slump gathers pace, unemployment rises and consumer confidence crumbles.

Mr Brown, hardly a year into the job, has faced calls to resign from within his own party in part because the government's handling of the economic slowdown has brought his leadership credentials, and Labour's ability to govern, into question.

His much-vaunted economic rescue package launched this week has failed to impress analysts who say there is actually very little room in the public finances to stimulate the economy.

While Mr Brown appears to have ruled out a one-off cash gift to help families cope with soaring utility bills, he has raised the level at which taxes must be paid when buying a home.

'I think they need to do more. That will come through very strongly during the Congress,' Mr Barber said, arguing that Labour needed to show it was on the public's side and taking decisive action to support hard-working households during the downturn.

'If that isn't achieved by the government then they risk badly losing public and electoral support,' he said.

Mr Barber warned that Britain could also be hit by more strikes over public sector pay, highlighting the civil service and teachers among those still disgruntled by their pay deals.

'We will potentially see industrial action,' he said, suggesting the government could consider altering its self-imposed limits on public debt to help finance higher salaries in the public service.

'What makes sense in today's world is to use government funding to help keep the economy moving rather than being locked down by that limit,' he said.