Britain is set to lose 163,000 jobs this year as the economic fallout from the Iran war hits hardest in lower-income regions, according to a new report by the Item Club. The independent forecasting group warns that South Wales and the Humber will face the most severe jobs market difficulties due to sharp rises in energy prices.
Both regions are heavily dependent on manufacturing and construction, which the Item Club says will cut jobs in response to escalating costs and supply disruption stemming from the Middle East conflict. Employment is predicted to 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, UK employment is forecast to contract by 0.4% this year, driven by a downturn in consumer spending, rocketing fuel and energy costs, and widespread shipping disruption. The Bank of England has cautioned that the unemployment rate could reach 5.6% this year under its more pessimistic scenario.
London is expected to see a fall of 25,000 jobs, with reductions of 12,500 in Birmingham, 9,800 in Leeds and 6,200 in Glasgow. However, Cambridge is projected to see employment growth, while Belfast and Edinburgh are expected to experience relatively modest job losses.
A Government spokesman said: 'Recent figures show that there was an improvement in the labour market at the beginning of the year... But we cannot escape the effects of the war in the Middle East which are likely to feed through to prices and employment in the coming months.'
