THE renewal of the Government’s austerity programme looks likely to hit the devolved regions and London the worst, according to a new report.
Capital Economics said the South East is likely to be the most immune from the next wave of cuts. But the respected City consultancy warned that all regions will suffer at least some damaging impact, pointing to a widespread dip in regional growth rates next year.
Capital’s report said the regional effects of the planned drop in public spending over the next couple of years could differ “fairly significantly”.
Author Vicky Redwood said the squeeze could knock more than 2 per cent off GDP in the regions that are most dependent on public spending, but less than 1 per cent in regions least dependent on public spending.
She said the regions that stand out as being most likely to suffer from the next stage of fiscal consolidation include the North East, Scotland and Northern Ireland, while Wales and London also look vulnerable.
Ms Redwood said the capital would suffer from cuts to housing benefit and pension tax relief as well as the crackdown on tax avoidance.
Yorkshire, the West Midlands and the North West lie roughly in the middle of the ranking of vulnerability, said Capital.