27,000 axed at Woolworths on dark day for High Street

LONDON suffered one of its worst days today since the start of the economic downturn.

A "terrifying" surge in the jobless total, more bad news from the high street and a further lurch in the value of the pound all fuelled the growing sense of crisis.

Woolworths confirmed this afternoon that 27,000 jobs will go when all 807 stores close on 5 January.

The number of people claiming unemployment benefit climbed above the one million mark for the first time since 2000. The rate at which jobs are being lost was the fastest for 17 years. In London the total has risen to 308,000, 7.6 per cent of the workforce. More than half of recent job losses have come in middle-class professions such as finance, advertising and consultancy concentrated in the capital.

Economists said the figures were the tip of an iceberg that will claim 120,000 well-paid white collar jobs in London by the end of 2010.

The dire jobless figures and the prospect of bank rate cuts sent the pound down to a new low against the euro. This afternoon sterling stood at 1.077 euros, down more than three cents.

There was more bad news for retailers with the CBI's distributive trades survey, its measure of activity on the high street, falling to its lowest level for a quarter of a century. There was also a warning that the slump in the travel industry could claim 15 more operators over the winter.

City analysts said the jobless figures revealed how the recession is reaping a disproportionately higher toll among London's professionals.

Ben Read, managing economist at forecasters CEBR, said: "The effects of mass redundancies in the financial and business services sector are now starting to come through in the statistics. The data reveals that the number of jobs in this sector fell by 72,000 over the three months to September.

"Worryingly, this data is for the period before the collapse of Lehman Brothers therefore we can expect to see much worse news on jobs in this sector in the months to come." Analysis by CEBR suggests that 62,000 London jobs will be lost in the financial services industries of the City, Docklands and Mayfair -where many hedge funds are based.

A further 60,000 will go in the business services sector, which includes estate agents, lawyers, consultants, advertising professionals and architects.

In a further indication of the cold economic winds sweeping through London's professional classes, property giant Savills issued a profit warning that sent its shares tumbling.

Lloyds TSB chairman Victor Blank said today that house prices will fall another 10 per cent. Economists said the speed of the economy's decline, combined with last night's historic decision to take US interest rates down to a record low, meant further reductions in the cost of borrowing are almost inevitable next month.

The minutes of the last Bank of England meeting, published today, show that its monetary policy committee considered whether to cut more than a percentage point. It only pulled back because of fears about the impact on sterling. Dr Howard Archer, chief European and UK economist at forecasters IHS Global Insight, said: "We expect the Bank of England to reduce interest rates by at least a further 0.75 per cent from 2.00 per cent to 1.25 per cent in January.

"Even so, another one per cent reduction is certainly possible in January."

Corporate recovery firm Deloitte said 200 of Woolworth's stores would close by 27 December followed by a second batch of 200 on 30 December, another 200 on 2 January and the final closures on 5 January.

Deloitte is set to flood the stores with 50 million extra items in the final run-up to Christmas with discounts of 60 per cent and more. Deloitte said it had received interest from other retailers for 300 of the stores.