Unemployment could top 2m by the end of next year but it is unlikely to reach the peak of the recession in the early 1990s, when more than 3m were out of work, a union leader said on Tuesday.

The warning from Brendan Barber, general secretary of the TUC, was made just 24 hours after the collapse of investment bank Lehman Brothers, with the loss of up to 5,000 UK jobs. It represents the biggest single loss of jobs since the failure of MG Rover in 2005, when more than 5,000 were thrown out of work.