Spending cuts 'may not turn economy around'

The Shadow Monetary Policy Committee (MPC) fears the impact on the region from public sector job losses could be too severe for the private sector to cope with.

But there was some cause for optimism, the low carbon economy being highlighted as an industry that could be capitalised on.

The committee voted to maintain both interest rates and quantitative easing at their current level.

Jonathan Priestley, chairman of the committee and partner at Lee & Priestley Solicitors, said: "There were a number of concerns raised about the CSR, and particularly people are worried about disposable incomes falling for households across the country."

The professor of monetary economics at the University of Leeds, Giuseppe Fontana, was the guest speaker at the MPC's quarterly meeting and said the Government's plans relied on hugely increased levels of private investment in the economy.

He said: "I think the Government is thinking we need to look after the budget, take Government out of the economy so the private sector can step in. This would mean that exports would need to step in, that investment would go up by 45 per cent and this would have to be realised by 2015.

"Historically that is a very bold assumption. In this country, there is very little historical support for the logic that is supporting the comprehensive spending review. But I do not think there is a risk of a double-dip recession.

The regional secretary of the TUC, Bill Adams, warned: "It looks like there will be 7,000 public sector jobs going in Leeds alone over the next two years – the effect on the Yorkshire economy as a whole will be pretty devastating."

But the chief executive of CO2Sense Yorkshire, Joanne Pollard, offered some hope, saying: "There is potential in Yorkshire for two big opportunities in the low carbon industry."

"There is the Green Investment Bank which could improve our understanding of low carbon business and Carbon Capture and Storage, with Powerfuel's clean-coal plant at Hatfield."