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Slump, the forbidden word, is now used by the Nobel prize winner Paul Krugman. This week's economic metaphors look down the barrel of a gun at a tsunami thundering in with Britain flatlining on life support. Every day this week thousands more jobs crashed out of myriad industries. Latest figures flash up 2 million unemployed by Christmas.
On Thursday BT cut 10,000 jobs in one day. See how the lid is being lifted on the "flexible" work culture beneath the surface glitz of the boom years. Which jobs will go? Don't worry, said the BT boss, Ian Livingston: "Most job losses will come from contractors and third parties." The brunt will be born by thousands of agency workers owed no redundancy. That's what "flexible" means, whose virtues Gordon Brown so often preached to recalcitrant Europe.
In BT's Chester call centre agency, workers were fired with three weeks' notice and no compensation. Most had worked there several years, paid a third less than permanent staff, with no sick pay or pension. I spoke to Simon Jones, a 27-year-old who has worked for BT Openreach for nearly four years. His agency says he'll get no redundancy: instead this week they will deduct £100 from his £7.05 an hour payslip as overpaid holiday money he will now never earn - and there's nothing he can do about it. The 5.5% of the UK workforce that is temporary will be first out everywhere - the "flexible" army that fuelled the boom: cheap, no strings, with no compensation to ease job-hunting on £60.50 a week jobseeker's allowance.
For the past 11 years Labour obstructed the EU temporary workers directive to give agency workers equal treatment. Finally, the government was arm-twisted into signing up in the annual pre-party conference bartering for union support. But it won't come into effect for over a year, so it's no help now.
The economic freeze exposes what lay beneath the miasma of the boom. Labour's misplaced awe for high finance and business deregulation will puzzle historians in future years: now Brown calls for global re-regulation. Who were the winners and losers? Figures from the Office for National Statistics reveal that in recent years the bottom 80% hardly shared in any GDP growth. Most was in the top 5%, especially the top 1%, about whose swelling wealth Labour said nothing. It's time to end the bonus culture when the Hay Group reports this week that average top UK CEO packages are the highest in the EU, at £5.2m. Bankrupt HBOS has the gall to tell shareholders: "We do not intend to change the fundamental design on incentive schemes for 2008." Nothing has changed - yet.
But there is still time for redemption - nine days. The pre-budget report on November 24 is the last chance to take drastic action before it is too late. Will Labour dare borrow and spend to stimulate the economy enough to stop catastrophic job loss and deflation? Krugman says it must be a massive 4% of GDP for the US. Some economists here now call for 2% - a huge £30bn spend. Brown and Darling can pick economists to support any view: it hangs in the balance.
But Brown needs to put a mountain of money where his mouth is. If Britain's borrow-and-spend is not big enough, his plea for global spending will look empty. What to do? Priority must go to whatever kickstarts the economy fastest: conveniently, that's exactly where Labour should and will spend first - on the poorest, who spend it fast locally, rolling through the economy far longer than money the better-off would save or spend on foreign goods and holidays. So it's time to raise child tax credits by at least the £3bn it would cost to lift half the children out of poverty by 2010. The working tax credit needs to rise too for all without children, who Labour has made absolutely poorer than in 1997. With millions out of work, the dole needs to rise to £100 a week just to get back its 1997 value. The employment minister, Tony McNulty, says that would be a "disincentive to work", but let him try surviving on £60.50 a week.
All Labour borrowing should go on what it should do anyway. Waste no money on general tax giveaways or VAT cuts. The great majority in work will do well as prices fall. A politically cynical pre-election bribe would backfire badly: learn from the disastrous 2p tax cut funded from the 10p tax band abolition.
Instead now is the time to clamp down on the tax dodgers, the 70,000 foreign bank accounts HM Revenue and Customs suspects of withholding at least £400m of tax. Work with Obama to close down all our tax havens and bring home the stolen cash. Now is the time to tell the rich they must pay their fair share: only Luxembourg has a lower top tax rate in the EU. Meanwhile, take the low paid out of tax.
It's bad news that banks are to be supervised by their own ilk, ordered to make maximum return for taxpayers' investment. Instead, that £37bn bail-out from greed and folly should now force them to lend at low rates to home owners and businesses: take no prisoners. Use Northern Rock and the mercifully rescued Post Office to offer a people's bank lending at fair rates to save the low paid from loan sharks.
It's not hard to create jobs and offer a youth job guarantee. A big new home insulation programme will save energy and create work fast. The Home Builders Federation says it can build 17,500 new homes for £2bn: projects are ready to go. Build, build, build social housing mixed in with homes to sell in better times: the state will profit. No one else is building, banks won't lend, social housing is at a standstill as it depended on section 106 add-ons to now-cancelled private developments. Revive the construction industry, employ armies of apprentices: 3m homes are desperately needed anyway. Nurseries and social care need more staff: now is the time for intensive high-quality training for better jobs. Women's pay fell yet further behind men's in yesterday's figures released by the ONS.
How lucky that Labour's priorities - green jobs, social housing and redistribution to the poorest - are also the best economic instruments. But expect little gratitude. If all that worked to make recession shallow and unemployment mild, Labour will struggle to prove its timely spending saved the day. Instead there will be recrimination for the extra debt for what turned out to be a minor crisis. Politics is unforgiving and winning the next election will be extraordinarily difficult. The best hope is to have done the right things for the right reasons, with no cheap bribes.
polly.toynbee@guardian.co.uk
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