Cuts knock-on could cause ‘1 million job losses’
By Peter Wozniak
Nearly one million jobs may be lost as a result of the government’s austerity drive, a report by PwC has warned.
More concerning for the government is the prediction that fully half these job losses will occur in private sector firms which rely on government contracts.
The PwC report added a note of optimism however, arguing that although the job losses will cause a slowdown in growth, they will not drive the country back into a much-feared ‘double-dip’ recession.
John Hawksworth, chief economist at PwC said the cuts would be “a drag on the pace of the economic recovery, but should not derail it altogether”.
The coalition will nonetheless be deeply worried about the projected figures, since both ruling parties are banking on a strong private sector-led recovery being well underway by the time the next general election arrives in 2015.
Angela Eagle, Labour’s new chief secretary to the Treasury said the report “will be very worrying for those people already concerned about the future of their jobs and is yet another warning about the risks the coalition government is taking with the economy.
“And this isn’t just about the public sector. The report is very clear that by cutting at this reckless pace the Government will hit the private sector hard, before it is fully back on its feet. The government should not be taking this gamble with the economy.”
According to PwC, ‘knock-on’ job losses in the private sector could mean £46 billion of output lost by the year of the next election.
The report also highlighted the fact that the impact of the spending review will be anything but uniform, with Northern Ireland, Scotland, Wales and the north of England set to lose proportionally more jobs.
In Northern Ireland alone, 5.2% of all jobs look set to be lost.
Mr Hawksworth pointed out that although low interest rates ought to lead to a strong private sector recovery, this will not necessarily correspond to those areas worst hit.
The leaders of the devolved administrations have already pleaded with the government to take their comparative vulnerability into account when distributing the cuts.
Plaid Cymru leader Ieuan Wyn Jones warned of a regional ‘double-dip’ in Wales.
“This report confirms what we in Plaid Cymru have been saying all along. The prediction of 52,000 job losses in Wales resulting from ConDem cuts is deeply concerning,” he said.
“The London government’s plans threaten to seriously undermine the economic recovery here in Wales where we will be disproportionately affected.”