North left behind as chasm in prosperity widens

Jobs will fall sharply across Yorkshire but continue to increase in the South according to a study from accountants KPMG and the Chartered Institute of Personnel and Development (CIPD).

The report strikes another blow to the Government’s pledge to rebalance the economy amid claims that spending cuts are set to have a harsher impact on regions like Yorkshire than London and the affluent areas surrounding the capital.

Today’s report – a quarterly survey on the labour market – backs up the Yorkshire Post revelation that while more than 100,000 people are in work in London compared to a year ago, the number of people employed in Yorkshire has fallen by 20,000. The findings sparked the launch of our Fair Deal for Yorkshire campaign.

The report says: “Regional differences are just as stark as those between the employment sectors, with survey findings pointing to a further widening of the North-South divide.”

The report reveals that the employment balance, which measures the difference between employers that intend to increase staff and those intending to cut staff, found a 10 per cent growth in the South, but a six per cent drop in the North.

The chief economist at KPMG, Andrew Smith, said: “The economic storm clouds are gathering. Fiscal tightening and the squeeze on real incomes, a worsening debt crisis in the eurozone and barely stall-speed growth in the USA are all affecting prospects for growth in the UK.

“Of particular concern is that hopes of a general rebalancing in the economy, away from consumption towards exports and investment, are being dealt a blow by sinking manufacturing confidence – undermining hopes that cuts in public sector employment will be offset by the private sector.”

Last month Business Minister Mark Prisk visited Leeds and claimed private sector growth would balance the cuts in public spending, highlighting the 450,000 private sector jobs created since the coalition came to power.

But Mr Prisk was unable to say how many of those jobs were created outside of London and the wider South-East. As figures show jobs are falling in Yorkshire, the chief executive of Leeds, York and North Yorkshire Chamber of Commerce, Gary Williamson, called for more investment in the region.

“These figures are disappointing, but perhaps not surprising given the strength of South-East’s recovery from the recession,” he said. “The challenging jobs market in the North of England reinforces the chamber’s message that everyone in this area needs to back ambitious development projects that will deliver jobs and wealth to the local economy.”

The report says that falling confidence among private sector employers has led to a more sombre outlook.

Gerwyn Davies, Public Policy Adviser at the CIPD, said: “Increasing uncertainty about growth prospects in both the UK and global economies is now affecting hiring intentions; particularly in those industries such as manufacturing that stand to lose most in the event of a global slowdown.

“Together with the public sector redundancies, which will affect one in 20 front-line workers according to our survey, the recent story of an employment revival may become one of an employment relapse.

“The survey evidence suggests that the relapse will hit some regions much harder than others, which points to the further development of a two-speed economy.”

A spokesman for the Department of Business, Innovation and Skills said: “These are challenging economic times but the Government is determined to do all it can to create the right conditions for a private sector led recovery.”

The Fair Deal for Yorkshire campaign was launched last month after it emerged the region’s economic recovery was lagging far behind London and the South East.

The number of people in work has fallen by thousands while affluent areas of the South are growing. The region is suffering in terms of transport funding and house building while council leaders attacked Whitehall plans to fund local authorities from the business rates in their areas, claiming the move will disadvantage the North.

Research has also claimed changes to health funding will slash £100m from Yorkshire health trusts’ budgets.