The UK is expected to lose 163,000 jobs this year due to the economic impact of the Iran war, with lower-income regions hit hardest, according to a report from the Item Club. The independent forecasting group warns that South Wales and the Humber, two of the UK's lowest-income regions, will suffer the most severe job losses because of sharp energy price rises and their reliance on manufacturing and construction.
The report predicts a drop of 5,700 jobs in South Wales and 2,800 in the Humber over 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.' He added that consumers in these areas typically have less savings, reducing spending in retail and hospitality.
Nationally, UK employment is forecast to decline by 0.4% this year, equivalent to 163,000 net job losses, driven by reduced consumer spending, soaring fuel and energy costs, and shipping disruption. The Bank of England warned last month that unemployment could hit 5.6% this year, up from 5.2%. The Item Club said retail and hospitality will suffer the biggest slowdown in major cities, with London losing 25,000 jobs, Birmingham 12,500, Leeds 9,800, and Glasgow 6,200.
However, some areas may fare better: Cambridge is expected to see employment growth, while Belfast and Edinburgh are projected to have relatively limited job losses. Publicly-funded sectors such as education and health are expected to hire more, but not enough to offset wider losses. The report also warns of a widening gap in living standards, with low-income households spending up to 13% of disposable income on energy and food, compared to less than 9% in London.
A Government spokesman said: 'Recent figures show an improvement in the labour market... but we cannot escape the effects of the war in the Middle East.' He added that the government is supporting the country by slashing energy bills for manufacturers and pursuing clean power by 2030.
