PLANS to slash the country's debt through massive spending cuts will hit the North much harder than the South, new research concludes.
Think-tank Centre for Cities has highlighted a division in how different parts of the UK are recovering from recession and are placed to absorb cuts to the public sector.
Sunderland is named in the Cities Outlook 2011 report as one of the most vulnerable places in the country, prompting a backlash from the council’s boss.
The report pulls together figures on things like unemployment, the number of people on benefits, average earnings and the number of public versus private sector jobs.
It finds certain parts of the country will be much harder hit by forthcoming cuts to welfare and the public sector, as the Government tries to reduce the country’s deficit and will find it much harder to bounce back from recession.
Cities in the North East and North West are most likely to be affected, with those in the South and South East least hard hit.
Sunderland is said to be among those cities with “weaker private sector economies” which rely heavily on public sector employment.
These cities face “significant challenges in the months ahead”, the report’s authors say, and may need extra cash from the Government.
While not predicted to struggle so badly, the Newcastle area, which also comprises North and South Tyneside and Gateshead in the report, will also be hit.
Sunderland City Council’s chief executive Dave Smith is due to speak at an event in London today to coincide with the publication of the report. He will use his speech to counter the independent think-tank’s claims that Sunderland is vulnerable, by highlighting the success of private firms based in the city.
Mr Smith said: “Sunderland’s economy has come a long way in the last 20 years. We continue to adapt and to keep Sunderland improving we have to look ahead to emerging opportunities. We all want a more prosperous future for the city and we now have a clear economic masterplan to achieve this.”
Sunderland joins Liverpool, Birkenhead, Swansea and Newport in Wales on the “vulnerable” list.
Alexandra Jones, chief executive of the Centre for Cities, said: “Buoyant cities like Leeds and Bristol, which have been fast-growing and have lots of private sector jobs, are best placed to lead the UK’s recovery.
“During 2011, the UK cities most dependent on the public sector, and which have seen slower economic growth over the last decade, will find it more difficult to rebalance towards the private sector. These cities will need realistic plans of action to ride out the spending cuts and create jobs – but they will also need additional financial support from central Government.”
According to the report cuts to welfare budgets will take cash out of the economies of cities like Sunderland, making it harder for them to get out of recession. Depending on the scale of the cuts in Newcastle between 7,500 and 10,700 public sector jobs will be lost, according to the report, while in Sunderland the toll will be 2,500-3,400.
A Department for Business spokesman said council organisations such as the North East Local Enterprise Partnership will help grow city economies.
“The partnerships are well placed to understand the demands of their locality and will have the power to make the best decisions for their communities.
“The £1.4bn Regional Growth Fund will also help support projects which will create jobs and secure long-term growth in the private sector.”
