Labour to set out plan for economic recovery: Government inaction over recession is criticised as Brown cites fear of unemployment as biggest obstacle to the restoration of confidence

ACTION TO reduce unemployment was the key to unlocking the log jam of economic confidence, Gordon Brown, the shadow Chancellor, said yesterday.

Mr Brown told a Westminster press conference that the Shadow Cabinet's economic sub-committee would be meeting tomorrow to consider a four- point alternative to government inaction on the recession.

But he added: 'It is the absence of business and consumer confidence that is the main barrier to industrial recovery in this country, and it is the fear of unemployment that is the biggest obstacle to restoring confidence.

'It is this that is preventing people spending, people investing. It is preventing people moving homes, and it has to be unlocked if we are to have a substantial recovery.'

Attacking the Government's 'stubborn and persistent' refusal to consider alternative programmes, he said the Japanese and other EC countries had taken action and added that shadow ministers would be finalising details of a package which could include measures to reduce unemployment, encourage investment, and revive the housing market, as well as reiterating the repeated call for EC action on high-level interest rates.

Mr Brown said a Labour survey had shown 'huge falls in industrial output and strength', prompting fears that unless action was taken, British industry would become too small to benefit from an upturn in demand. As a result of the post-1990 recession, he said, mechanical engineering output had fallen by 17.8 per cent; footwear and clothing by 13.4 per cent; minerals and building materials by 12.9 per cent; car production by 11.7 per cent; and electrical and instrument engineering production by 7.5 per cent. 'No other EC country has seen such a fall in capacity in key sectors,' he said. Mr Brown's attack on the Government record was underscored by Frank Dobson, Labour's frontbench employment spokesman, who said that more than a third of manufacturing jobs had been lost since the Conservatives took office in 1979.

Mr Dobson said the country was being brought to its knees by the loss of more than 2 million manufacturing jobs - down from 7.1 million in June 1979 to 4.6 million at the end of last year.

In the South-east, the number of manufacturing jobs had fallen by 729,000 to 1,154,000; Scotland was down by 220,000 to 383,000; and in the West Midlands, there had been a fall of 401,000 to 585,000.

'Britain has a Tory government devoid of any industrial strategy,' Mr Dobson said. 'What these 2.4 million people used to make we now have to import instead.

'Britain is supposed to be preparing for the single market to come into operation next January. We were supposed to be building up our industrial strength and fitness. Instead we've been throwing it away. We'll not be on our marks, we'll be on our knees.'

Mr Brown called on Norman Lamont, Chancellor of the Exchequer, to set up an inquiry into bank charges following reports that more banks were considering increases. 'Customers - already facing rising charges in the last year - can ill-afford to pay more,' he said.