Two million Britons on the dole by Christmas
The first and hardest hit are the building industry, car manufacturing and transport companies.
Small businesses face laying off their workforce and possible closure as the 'not yet recession' bites down.
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More than a million Britons will be out of work and on the dole by next month as the toxic fallout from Black October filters down to ordinary families, economists are warning.
A bleak Christmas lies ahead for many as the City turmoil spreads into the so-called real economy. Companies are now being squeezed on two vital fronts, with shoppers abandoning the high street and bank lending drying up, making it almost impossible for smaller businesses to get credit to stay afloat.
Geoff Hoon, the new Transport Secretary, yesterday warned that there were 'potentially serious consequences for small business, for employment' from the current crisis, reflecting private warnings to the Prime Minister's new economic 'war cabinet' that job losses and business collapses later this year are now virtually inevitable.
Official unemployment figures for September, due on Wednesday, are expected to show another increase in job losses - although this will not yet be the sharp upward spike which is expected as the full consequences of last week's stock-market crash filter through. Some forecasts suggest that unemployment will hit two million by Christmas.
Some government officials warned that those slipping into unemployment could find themselves much more isolated than in the last recession. They pointed out that unemployment benefits had slipped relative to earnings and there were now fewer council houses available.