Yorkshire towns and cities 'face second recession'

While Leeds as one of the country's economic powerhouses is well placed to prosper as the UK emerges from the downturn, other cities are facing a "second wave recession", analysts say.

Doncaster and Barnsley are among five English urban centres said to be facing a particularly tough outlook, their reliance on public sector jobs making them vulnerable as a post-election government takes the axe to spending.

Research institute the Centre for Cities says its findings should be a wake-up call to political parties ahead of the General Election to ensure parts of the region are not left behind.

The report was published as a warning was issued that the UK economy had moved into a decade of painful readjustment.

That finding was issued by Ernst & Young Item Club which said the bounce-back so far had been driven by the car scrappage scheme, Alistair Darling's VAT cut and factory re-stocking, and the future recovery would depend on exporters' success in winning new business from Asia.

Centre for Cities chief executive Dermot Finch said: "We face an uneven recovery. The national economy may be emerging from recession but cities like Brighton are likely to recover more strongly than the likes of Barnsley.

"Party leaders need to wake up to the reality that some cities will still feel in the middle of a recession until well after the election. The next Government needs to help these struggling cities fix the basics – like improving schools and public transport so they can attract new business and jobs."

The chairman of the Local Government Association which is backing the report, Coun Margaret Eaton, said: "The recession is affecting different parts of the country very differently to others, which underlines how a national, one-size-fits-all solution to getting us out of the downturn simply isn't going to work."

Today's report – an annual analysis of the performance of 64 English towns and cities – predicts a gradual recovery from the recession, with cautious companies likely to be slow to invest and recruit.

It warns many places may even see a "jobless recovery", with an upturn bringing few new jobs because employers who have kept on workers despite production falling can increase capacity without needing to recruit.

Identifying the need to attract and expand private sector jobs during the recovery – especially because of the strains on public finances – it says Leeds is well placed because its size makes it an "important economic centre".

But it paints a far bleaker outlook for other centres, with Barnsley and Doncaster among those most at risk because of high numbers of residents without qualifications, low levels of business start-ups and falls in the number of private sector jobs in the decade up to 2008.

"For many UK cities that have benefited from public sector jobs growth over the last decade, this will feel like a second-wave recession," the report warns.

"Providing on average more than one in four jobs, the public sector is a big employer in cities – in particular in many northern cities.

"In many areas it has been viewed as a cushion to the impact of the recession as the private sector has suffered first. But previous levels of public sector employment growth in cities will certainly not return

- and in reality, many public sector jobs will be lost."

The report singles out Hull to illustrate the divisions driven deeper by the recession. The number of people claiming Jobseekers' Allowance in Hull has soared by more than 6,000 during the recession, compared with less than 2,000 in York.

Centre for Cities warns that in the tight financial climate government should not concentrate on "constructing shiny new buildings"but should fix the basics – better schools, raising skills and improving public transport.

It calls for a mayor with powers to govern over the greater Leeds area and says the next government needs to draw up a new "urban policy" which recognises cities will be the ones driving economic recovery.

The chief economist for regional development agency Yorkshire Forward, Patrick Bowes, said: "We welcome the news that Leeds is among those cities expected to drive the UKs economy out of the recession as we believe that Leeds is central to helping the region move quickly out of recession.

"In a tight public spending climate, we believe that it is now more important than ever that we continue to run efficient regional economic development programmes to ensure there is no duplication or variation in the quality of support we give to businesses in Yorkshire and Humber, while continuing to ensure the right resources are directed to the right areas."