Employment won't return to pre-recession levels until after 2020 in North East and West Midlands

Economic forecasting for IPPR North shows that the North-South divide in employment is set to widen, with the North of England and the West Midlands trailing behind as the Greater South East recovers fastest.

A new IPPR North briefing published this week shows that employment will not return to its 2008 peak until 2018 in the North West; 2019 in Yorkshire and Humber; and by 2020 it shows that the North East and West Midlands will only return to 1990 levels and will still be someway off the 2008 peak.

By contrast, the forecasting indicates that employment will return to its 2008 peak by 2014 in London, the South East and the East Midlands.

Ahead of next week's autumn statement, IPPR North warns that chancellor George Osborne needs to focus on boosting employment in underperforming regions with targeted interventions to drive growth in those areas worst affected.

The briefing, prepared for IPPR North's Northern Economic Futures Commissionshows that employment levels in 2020 as compared with employment levels in 2008 will be:

• 3 per cent lower in the North East
• 2 per cent lower the West Midlands
• The same in Yorkshire and Humber
• The same in the North West
• 4 per cent higher in the South West
• 5 per cent higher in the East Midlands
• 8 per cent higher in the South East
• 9 per cent higher in the East
• 10 per cent higher in London

IPPR North recommends a five-point plan for growth in regions most at risk:

1. A targeted jobs guarantee: a job paid at the minimum wage or above, to anyone who has been unemployed and claiming JSA for more than 12 consecutive months targeted to the worst affected areas.
2. Innovation clusters: these should be in specific places and focus around renewable energy; advanced manufacturing: health and medical; nuclear; marine and ports.
3. Capital allowance concessions: government should introduce targeted tax incentives such as higher research and development tax credits and increasedcapital allowances for specific areas of investment and innovation.
4. Bring forwardcapital spending on infrastructure projects including the Northern Hub transport development.
5. A regional investment bank: focused on investment in innovation and small and medium-sized businesses.

Ed Cox, Director of IPPR North said:

"The situation outside of London and the South East is looking bleak, particularly in the North East and West Midlands where the jobs recovery is expected to take more than a decade. This new research is alarming and something urgently needs to be done to stop the gulf widening and people in the worst affected areas suffering a dismal decade. But there are things that can be done right now to help and a jobs guarantee would be a good place for George Osborne to start. This would help boost employment in the areas that need it most and offer some hope to people who are long-term unemployed."

Notes to Editors:

This forecasting is being published ahead of an IPPR North conference on how to boost economic growth in the North at which deputy prime minister Nick Clegg is speaking on 8 December in Leeds.

The economic forecasting was carried out by Oxford Economics for the IPPR North Northern Economic Futures Commission. The forecasts are taken from Oxford's established multi-regional model and are based upon behavioural equations based upon established econometric relationships, recent data trends and established regional specialisms. As the multi-regional model sits within Oxford's model hierarchy, it is linked with their highly regarded and unique Global Econometric Model, which in essence means the regional forecasts take account of the UK's trading relationship with other countries.

The North East and Yorkshire and Humber are the top regions for increases in unemployment in England. Over the last quarter compared with the previous quarter unemployment rose by:

• 1.5 per cent in the North East
• 1.1 per cent in Yorkshire and The Humber
• 0.7 per cent in the South East
• 0.4 per cent in the West Midlands
• 0.2 per cent in London
• 0.1 per cent in the South West

% of the workforce unemployed at 5-year intervals

Total employment ('000s) by region, from peak of employment (2008) to 2020

Contact:

Tamsin Crimmens, 07800 742 262, 0191 233 9051, t.crimmens@ippr.org