The Item Club's latest regional outlook warns that two of the UK's poorest regions – South Wales and the Humber – will endure the most severe jobs market difficulties over the coming year or so, owing to sharp rises in energy prices, The Daily Mirror reported.
Both areas are heavily dependent on manufacturing and construction industries, which the Item Club cautions will cut jobs in response to escalating costs and supply disruption stemming from the Middle East conflict.
The report predicts employment will fall by 5,700 in South Wales and by 2,800 in the Humber throughout 2026.
Tim Lyne, economic adviser to the Item Club, said: "Some of the lowest income regions will feel the biggest effects of the manufacturing and construction sectors reducing headcount in the face of rising energy prices and supply chain disruption. While consumers in these areas typically have less rainy-day savings, which will reduce spending in the retail and hospitality sectors."
Overall, the report forecasts UK employment will contract by 0.4% this year, equating to 163,000 net job losses.
This will be driven by a downturn in consumer spending, rocketing fuel, energy, materials and ingredient costs, as well as widespread disruption to shipping. The Bank of England cautioned late last month that the UK unemployment rate could reach 5.6% this year, rising from the current 5.2%, under its more pessimistic scenario for the war's impact.
The Item Club stated that as households cut back on discretionary spending amid soaring living costs, the retail and hospitality sector will experience the sharpest slowdown across Britain's major cities.
MNA
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