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When dole queue became reality for thousands
7:00am Saturday 3rd January 2009 in Jobs & Careers
THE credit crunch became a grim reality for millions of people in 2008 as the UK slid into recession and tens of thousands joined the dole queue.
The shockwaves from the turmoil enveloping the banking sector rocked the economy as dearer mortgages sent house prices plummeting, and consumers also wrestling with higher food and petrol costs shunned the high street.
February's nationalisation of lender Northern Rock would be overshadowed by a once-in-a-century crisis leaving swathes of the UK's banking industry in public hands by the end of 2008.
Despite the attempts of several to fortify their finances with billions from shareholders in the spring, fear gripped markets waiting for the next victim.
US investment bank Bear Stearns was rescued in March - but the biggest crisis of all was triggered in September when officials refused to step in to save rival Lehman Brothers.
The collapse of Lehman, heavily exposed to the complex mortgage-backed investments hit by the crunch as confidence drained away, gave the world's financial system a virtual heart attack.
The breakdown of trust as banks refused to lend to each other triggered a series of events described as "almost unimaginable" by Bank of England Governor Mervyn King.
In the UK, Bradford & Bingley was broken up and part nationalised, and HBOS was forced to seek safety in the arms of rival Lloyds TSB to prevent another possible collapse.
A historic £400 billion package was finally unveiled in October to prevent UK banks from going under altogether. Royal Bank of Scotland, once the UK's second biggest bank, is now majority-owned by the taxpayer after a £20 billion bail-out.
According to the Bank of England's latest estimate, governments worldwide have spent more than £750 billion so far saving banks, which have racked up a mammoth 2.8 trillion US dollars (£1,900 billion) in losses since the beginning of the credit crunch.
In the real world, this meant households and businesses saw scarcer and more expensive mortgages and lending as banks sought to repair the damage of years of reckless lending.
The mortgage squeeze sent house prices tumbling more than 16% in the year to November, while businesses also suffered tighter terms on top of a spike in costs driven by oil hitting a record 147 US dollars a barrel in July.
Labour's boast of 16 years of growth came to an end between April and June when the economy ground to a halt, before a 0.5% slide between July and September.
The first recession in 17 years will be officially confirmed in January. With businesses across the country already shedding staff by the thousand in the downturn, 2009 promises to be a miserable year as the jobless count rises steadily towards three million.