10.09.10

Spending Cuts Threaten to Reinforce North-South Divide

New research commissioned by the BBC confirms fears that public spending cuts threaten to reinforce the so-called North-South divide.

The study carried out by Experian looks at four key themes: business, community, people and place and then based on an analysis of various factors, assesses the ability of 324 council areas in England to withstand sudden changes in the economy.  Each area has then be ranked in order of its ability to withstand such changes and a clear North-South divide is evident. 

Middlesbrough, where over 40 per cent of workers are employed in the public sector, is judged to be the area least resilient to cuts in public spending. The three biggest employers in the town are all in the public sector.

After Middlesborough come three areas in the Midlands, Mansfield, Nottinghamshire and Stoke-on-Trent.

Other areas in the North East, namely Redcar and Cleveland, Hartlepool, South Tyneside and Sunderland, are all in the bottom 20 of the study’s ‘resilience’ table.

At the other end of the scale comes Elmbridge in Surrey at the top of the table, followed by St. Albans in Hertfordshire and then Waverley in Surrey as the areas most resilient to change.

Earlier this week the TUC published an analysis of official statistics showing that Government spends half as much again on buying goods and services from the private sector as it does on its own pay bill for public sector employees. 

The amount the Government spends on goods and services supplied by the private sector amounts to over £4,000 for every adult in the UK according to the TUC’s analysis.

Commenting on their findings, TUC General Secretary Brendan Barber said:

“Commentators talk as if public sector staff will be the only losers from Government austerity, but the private sector will inevitably be hit just as hard by the savage cuts promised in the Comprehensive Spending Review.

“Such cuts are bound to lead to substantial job losses in companies that have public sector customers. But this will only be the most obvious effect on private sector jobs and profits.

“Staff made redundant from either sector, or who fear they might be, will cut back their spending. Companies that lose public sector contracts will stop buying goods and services from other firms. The net result is a big loss in business and consumer confidence.

“This is why we are so worried about the prospects of a double dip recession. At best the most we can see is a shallow recovery where the economy bumps along the bottom and fails to generate the jobs we need.”

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