White-collar workers will be in the front line of rapidly accelerating job losses, economists forecast yesterday.

So far manufacturing and construction have suffered most as companies caught in the credit crunch have been forced to shed jobs. But the crisis in the banking sector is likely to inflate the numbers still further as thousands of jobs are expected to be shed after Lloyds TSB takes over HBOS.

Cost-cutting in the public sector is also expected to account for thousands more jobs. The Treasury is to ask Whitehall departments for updated plans for tens of thousands of job cuts in the next few weeks, The Times has learnt.

Ministries have been told to draw up a new round of cuts as part of an efficiency drive for the next three years, and to cut their adminstrative budgets by 5 per cent.

Departments will be asked to provide their latest figures in time for the Pre-Budget Report expected in November so that Alistair Darling, the Chancellor, can provide an update to Parliament, Treasury sources said. Several departments will have to accelerate job losses to balance their books by 2011.

The total of people out of work is expected to rise to 3 million within two years after figures yesterday showed that unemployment rose at its fastest rate in 17 years in the three months to August. Numbers out of work soared by 164,000 to 1.79 million in the three months to August on the Government's preferred Labour Force Survey gauge of unemployment.

The jump in the jobless count came as a stark warning to the Government that, despite international praise for its bank bailout plan, clear signs of recession are now emerging.

David Blanchflower, a member of the Bank of England's rate-setting committee, said in an interview yesterday that the figure could rise to more than two million by Christmas. Vicky Redwood, of Capital Economics, the consultancy, gave an even gloomier forecast. “We expect the measure to rise by a total of 1.5 million to around 3 million by the end of 2010,” she said.

Yesterday's figures showed that headline unemployment based on numbers claiming jobless benefits jumped by 31,800 to 939,000 last month. The eighth consecutive monthly rise came as experts sounded warning that this total, too, could exceed 1 million within a few months.

Construction companies have been among the worst hit by deteriorating economic conditions as the housing market has ground almost to a standstill. House prices have fallen by more than 12 per cent over the past year, the Halifax said.

Housebuilders have been forced to halt projects and lay off workers as potential buyers have struggled to secure mortgages because of the credit crunch. The number of jobs in this sector fell by 17,000 in the year to June, official figures show.

Manufacturers have also suffered badly, with nearly 50,000 jobs lost as demand has waned. Hard-pressed consumers have been reining in their spending as the cost of living rose to its highest since the end of the last recession in the early 1990s, forcing restaurants and hotels to cut thousands of jobs between April and June.

Home repossessions are expected to rise by 50 per cent to 45,000 this year, and mortgage lenders have given warning that this could rise further next year. Alan Clarke, an economist at BNP Paribas, said: “Employment is falling off a cliff and it is still early days in this slowdown.”

The Bank of England is under pressure to make another cut in interest rates after last week's emergency half-point cut to 4.5 per cent. Some experts say that the Bank could cut rates to only 2 per cent to reinvigorate the economy. Howard Archer, the chief UK and European economist at Global Insight, said: “We expect interest rates to be cut by at least another 50 basis points before the end of the year, very possibly as part of further co-ordinated central Bank action.”

The number of adults not working is more than 9.5 million if those who are “economically inactive” are added to the number of unemployed.

About 7.89 million people - 20 per cent of the working age population - are classed as economically inactive. The figure rose by 17,000 in the three months to the end of August. Economically inactive people include 2 million students and 2.2 million potential workers who are sick, on incapacity benefit or classed as “discouraged”. Discouraged workers are those who are not looking for work because they don't believe that there is any.

Q & A

I was made redundant yesterday. What do I do now?

If you think that you have been unfairly dismissed you could take your employer to an employment tribunal and could be awarded up to £63,000 compensation. Elizabeth Lang, of Bird & Bird, the City firm of solicitors, said: “If you are found to have been unfairly dismissed as a result of discrimination on the grounds of sex, race or age, there would be no limit on your potential compensation payment”

If I decide not to do battle with my employer, what next?

Work out how much money you should receive from your employer. If you have held your job for less than two years, you are entitled only to pay for your agreed notice period, typically anything from a week to three months. But if you have been working there for more than two years, you are entitled to statutory redundancy pay of a week's pay (up to £330 per week) for every year worked there, up to a maximum of 20 years. This sum increases to £495 for every one of those years that you were over 41 Do I have to pay tax on the money I receive?

The first £30,000 is tax-free, and you must declare any additional payment to the taxman

Am I entitled to jobseekers' allowance?

If you have been paying national insurance contributions for two years, you will be entitled to £60.50 a week for six months, or £47.95 if you are under 25, regardless of other assets or income

Will my savings or my spouse's earnings count against me?

You will be penalised if you have savings of more than £6,000. Your spouse's earnings will also be taken into account

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