London: Britain’s fiscal stimulus measures have saved at least 500,000 jobs during the recession, business secretary Peter Mandelson said on Wednesday before the release of figures expected to show unemployment surging.
Mandelson said government help for employers coupled with the Bank of England’s quantitative easing programme and 5% cut in interest rates had softened the recession’s impact on jobs.
However, Mandelson said he was worried about the damage caused by the recession to Britain’s economic fundamentals and its potential for future growth.
“The Treasury (finance ministry) estimates that there would have been at least, probably far in excess of, 500,000 jobs lost in the recession had it not been for the government’s and the Bank of England’s intervention,” he told BBC radio.
The level of unemployment would have been “much, much higher” without the intervention, he added.
The ILO jobless rate, due to be released at 0830 GMT, is expected to rise to 7.7% from 7.6%, according to analysts’ forecasts.
Recent economic surveys have suggested the worst downturn in decades in Britain could be coming to an end, although Mandelson said he was still concerned about the harm it has caused to the British economy.
“Two things worry me: one is the damage to our economic fundamentals, our capabilities in our economy on which future economic growth and employment rest,” he said.
“That is why we are maintaining spending and investment to the extent that we can, so as to limit the duration of the recession and its impact on the economy.
“Secondly, of course I am very concerned about the impact on those who are less well off.”
The Bank of England will shed more light on the economy’s outlook at 0930 GMT when it publishes its latest inflation report.
Responding to opposition Conservatives’ criticism over the level of public borrowing, Mandelson said the government was not being “fiscally irresponsible”.
“Over the medium term we have to rebalance the public finances in order to reduce the fiscal deficit,” he said.
“It is going to be achieved when are through this recession and when we are into the economic upturn...when we will have greater scope and flexibility.”