Unemployment is set to continue rising over the next five years in every region of the UK except for the South East, East of England and London.
That is the finding of the latest study from the Centre for Economics and Business Research.
These estimates, taken from the latest edition of Cebr's London, City & Regional Prospects report are an upward revision to unemployment rates compared to the previous report released in October. This is due to a generally weaker economic outlook for a longer period in the UK.
The regions expected to be worst affected by rising unemployment are those most dependent upon the public sector for employment and so are most exposed to Government cutbacks.
These include Northern Ireland, Wales, the North East of England and Scotland. The coming years will be a period of transition for these regions and countries of the UK as public sector support is withdrawn, a process that could help foster private enterprise and job creation in the long run.
With almost three in ten workers employed by the public sector in Northern Ireland, the increase in unemployment is expected to be particularly pronounced.
The unemployment rate is projected to rise from 8.8% in 2012 to 10.7% by 2016, weighing down heavily on consumer spending growth in the country. The last time that the rate was this high was in 1995, following the deep recession of the early 1990s.
A structurally weaker labour market than pre-financial crisis is expected for Scotland as public sector jobs are cut. The unemployment rate in the country is forecast to rise to above that of the UK average in 2012 and remain there until at least 2016, reaching 9.7% that year. The last time that the rate surpassed this was in 1993.
Weak consumer spending growth is expected to hold back the Welsh economy over the coming years. The forecast of high and rising unemployment levels will hold back household spending power, while consumer confidence is likely to take a knock from the fragile state of the housing market.
The unemployment rate for Wales is projected to increase from 9.5% in 2012 to 10.5% in 2016. This takes the rate to the highest that it has been since comparable datasets began in 1992.
The North East of England has the greatest public sector dependency of any English region, a fact that weighs on the employment outlook for the region. Unemployment is already the highest anywhere in the UK and is projected to rise further, from 12.0% in 2012 to 13.0% in 2016, slightly above levels seen in 1993 following the recession of the early 1990s.
Weak output growth in the North West as public sector spending is cut is likely to hold back job creation. As a result, the unemployment rate is forecast to rise from 9.5% in 2012 to 10.7% in 2016. This is broadly in line with the rate in 1993, following the deep contraction of the early part of that decade.
Workers in Yorkshire and the Humber are also particularly exposed to public sector job cuts, with 22.4% employed by the state at the end of 2011. With government cutbacks and weak expected private sector job creation, the unemployment rate is projected to increase from 10.2% in 2012 to 11.0% in 2016. This remains well above the national average and takes the rate to the highest it has been since comparable datasets began in 1992.
The economy of the East Midlands is projected to grow relatively quickly over the years to 2012, boosted by the manufacturing sector. As a result, private sector job creation in the region is expected to be relatively buoyant. The unemployment rate in the East Midlands is forecast to stay beneath the national average, rising only slowly from 8.2% in 2012 to 8.7% in 2016.
The West Midlands currently has a high rate of joblessness, with almost one in ten (9.8%) out of work estimated for 2012 as a whole. This is projected to rise to 10.4% by the end of the forecast period in 2016. However, this remains notably below the levels of unemployment seen during the recession of the early 1990s.
The East of England is expected to show a strong growth performance over the next five years, with the regional economy expanding at one of fastest paces of any region in 2012 and 2013, before being overtaken by London in the later years. As a result, the unemployment rate is expected to rise only marginally from 6.9% in 2012 to a peak of 7.1% in 2014, falling back to 7.0% by 2016. This is a stronger performance than that seen in the previous unemployment peak in 1993.
The labour market of the South East is expected to remain relatively buoyant over the coming years as strong output growth helps drive job creation. Consumer confidence in the region is expected to be boosted by the housing market, as house prices have recently seen some of the fastest growth of any region in the UK. The lowest dependency on the public sector for employment also shields workers in the region from the worst of government budget cuts. The unemployment rate is projected to fall from 6.3% in 2012 to 5.6% in 2016, the lowest of any region and well below the national average.
Private sector employment growth is expected to show strong growth over the years to 2016 in London, as the region leads the pack in output growth and job creation terms by the end of our forecast period. The unemployment rate is projected to rise from 10.3% in 2012 to 10.7% in 2013, remaining there until 2016, as job creation keeps pace with the rising economically active population. The last time that unemployment was higher than this was in 1996, as unemployment in the capital remained persistently high following the recession of the early 1990s.
The unemployment rate in the South West is forecast to remain below the national average, rising from 7.0% in 2012 to 7.5% in 2016, as the regional economy grows steadily. This leaves the unemployment rate below previous peak rates in 1992.
Rob Harbron, one of the report's authors and an economist at Cebr, said: "Five more years of pain are expected for much of the UK, with unemployment continuing to rise in almost every region.
"The outlook is tough for UK households, particularly those in places with a high dependency on public sector employment. Family budgets are being squeezed between the pressures of rising unemployment, low earnings growth and stubbornly high inflation."