Unemployment, home repossessions devastate British economy Business failures also add to decline

February 14, 1992|By Richard O'Mara | Richard O'Mara,London Bureau

LONDON -- The people of Britain got the message yesterday that their sinking economy is sinking faster than they thought. In fact, they got it twice.

New figures published by the government revealed that joblessness has reached 9.2 percent in the United Kingdom, the highest level in more than four years.

In January, 2.7 million Britons were out of work. Since March, nearly a million additional people have begun collecting unemployment benefits, and the figures released yesterday did not reflect the massive layoffs announced this week in the automotive and aerospace industries -- nearly 5,000, and expected to go much higher.

The Conservative government's employment secretary, Michael Howard, described the new unemployment information as "clearly disappointing."

The opposition Labor Party spokesman on employment, Tony Blair, called the figures "devastating." Jim Wallace, a spokesman for the Liberal Democrats, called them a "national scandal."

Almost simultaneously with the latest unemployment figures came word that more than 204,000 men, women and children lost their homes last year through repossessions. The total of mortgages foreclosed and homes seized by banks in 1991 reached 75,540. This marked a 500 percent increase since 1989.

Late last year, the Conservative government belatedly awakened the dimensions of the mortgage crisis and offered a rescue plan. For the first time, it permitted unemployment benefits received by those people in arrears to be paid directly to the banks; it removed some taxes on home purchases (in an attempt stimulate the housing sector) and persuaded banks to agree to allow some homeowners to become renters at lower monthly payments.

So far, there is no indication that the plan is having a positive effect;the banks have not delivered the amount pledged to the program.

The employment information, announced by the Department of Employment, and the housing figures, obtained by the British Press Association, show that not only are more homeowners finding themselves unable to meet rising mortgage payments, but renters are being thrown onto the street in greater numbers. There were 95,050 evictions of tenants in 1991.

It emphasized again that mortgage and rental repossessions are inflating the ranks of the homeless, with one in 10 of those evicted winding up in a shelter or on the street.

The economy's deteriorating condition has been the central question in British public discourse over the past few months. The recession reaches into every area: Not only are people losing their houses because of unemployment and rising mortgage rates, but business failures are increasing. In 1991 more than 4,000 British businesses and enterprises closed or went into bankruptcy, a 56 percent increase over 1990.

Yesterday, Ford Motors, Britain's leading car producer, revealed had lost more than $1 billion last year.

The debate on the economy has been rancorous, and the increasingly gloomy prospects it might have for his party have deterred Prime Minister John Major from scheduling a general election, which must be held before the beginning of summer.

Despite the drumming of bad news on the economy virtually every week, Mr. Major insisted that the country was on the verge of recovery and that Britain's recession is the consequence of economic downturns elsewhere in the world.

The Labor Party has insisted that the recession is the consequence of wrongheaded policies and a dearth of ideas and leadership from a Conservative Party in power for a dozen years. The party leader, Neil Kinnock, said yesterday: "This government caused the recession, they have continued it and now they have let it get out of control."

He again demanded the country be allowed to vote.

The Liberal Democrats' leader, Paddy Ashdown, also has repeatedly demanded the Conservatives face the voters. Yesterday, Mr. Ashdown -- who tends to mix his metaphors -- said the government was frightened, "like a rabbit caught in the headlights of a general election."

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