The latest Regional Prospects report from economic consultants, the Centre for Economics and Business Research (cebr), predicts that unemployment will exceed 10 per cent in half of the UK’s regions over the next five years – namely the North East, Yorkshire & the Humber, West Midlands, Wales, Northern Ireland and the North West.

The cebr expects that with financial and business services accounting for over 30 per cent of the London economy, the 4.0 per cent annual increase in financial and business services output in 2010 will drive London forward.  In the 20-year period from 1995 to 2015, it believes London will have grown its share of UK economic activity from 16.3 per cent to 19.8 per cent.

The South East and the South West are also expected to grow their share of UK economic activity over the same period. But with the exception of Northern Ireland, the rest of the UK is likely to see a drop off in their share, with the North West expected to face the biggest reduction.

Owen James, one of the report’s authors and an economist at cebr, commented:

“The gloomy figures released in this report may come as a surprise to some given the tentative signs of recovery in the UK labour market over recent months.

Ignoring the scale of public sector job cuts over the forecast period, however, would be misleading, as would any view that the cuts will not hit some regions harder than others.

“The government’s fiscal austerity measures will not only affect the public sector, it will also have an impact on those sectors supplying the public sector. As such, expecting the unemployment rate to differ substantially amongst regions over the next five years should not be shocking.”