M&S axes jobs, British rate cut looms

Retailer Marks & Spencer said on Wednesday it was cutting 1,230 jobs after a sharp fall in sales, and job losses in the financial sector added to pressure on the Bank of England to cut interest rates to a record low. M&S, Britain's top clothing retailer, reported its worst sales figures for a decade, hit by tough economic conditions following the global credit crisis.
Policymakers from the Bank of England were expected to cut interest rates from 2 percent on Thursday to help try to revive a faltering economy. Finance Minister Alistair Darling told the Financial Times that Britain was "far from through" a recession and surveys showed demand for staff, and pay levels weakening.
Darling predicted in November that the British economy would contract between 0.75 and 1.25 percent in 2009, but said that the worst would be over in the first half of the year. Britain has slashed interest rates by 3 percentage points since October and the government has cut taxes to try to ward off a deep recession, mirroring moves in other industrialised nations.
However, unemployment is rising and some commentators say it will be approaching a figure of three million by the end of the year. Subprime lender Cattles said on Wednesday it would cut 1,000 jobs or 20 percent of its workforce, while banking group Barclays plans to axe over 400 jobs in its UK technology departments.
Prime Minister Gordon Brown said the government was doing all it could to create jobs and to blunt the impact of the recession. "We are determined during this period of time (to have) inflation low. Interest rates will be low and that's the best way to stimulate the economy," he told reporters.
Brown, touring central England, was announcing plans to create an extra 35,000 apprenticeships for young workers, with a 140 million pound investment. M&S, which serves more than 21 million people a week from over 600 stores, said like-for-like sales fell 7.1 percent in the 13 weeks to December 27, broadly in line with analysts' expectations. "We expect challenging economic conditions to continue for at least the next 12 months," said Marks & Spencer (M&S) Chairman Stuart Rose.