Rachel Reeves could oversee Britain losing 163,000 jobs as 'fragile' economy faces employment disaster

TRENDING Stories Videos Your Say The Bank of England recently warned unemployment could rise to 5.6 per cent this year under its more pessimistic scenario for the economy.That would mark an increase from the current rate of 5.2 per cent.South Wales and the Humber are forecast to experience some of the steepest employment declines because of their heavy reliance on manufacturing and construction.Both sectors are particularly vulnerable to higher energy costs and supply chain disruption.The Item Club forecast employment in South Wales would fall by 5,700 this year, and the Humber is expected to lose a further 2,800 jobs.Tim Lyne, economic adviser to the Item Club, warned lower-income regions would face the greatest pressure as employers reduce staffing levels.Mr Lyne said: Some of the lowest income regions will feel the biggest effects of the manufacturing and construction sectors reducing headcount in the face of rising energy prices and supply chain disruption.Consumers in these areas typically have less rainy-day savings, which will reduce spending in the retail and hospitality sectors.LATEST DEVELOPMENTSBritish farmers fear Donald Trump's 'one-way traffic' beef deal will favour US producers over UKBritain’s housing benefits bill to hit record £38.8bn as Labour set to fall short on building targetMajor British high street chain faces bailiff threat over unpaid taxes with 'job losses anticipated'Britain’s major cities are also expected to suffer significant job losses as households cut back on discretionary spending amid rising living costs.London is forecast to lose 25,000 jobs during 2026, while Birmingham could see employment fall by 12,500 positions.Leeds is expected to lose 9,800 jobs, while Glasgow could experience a decline of 6,200 roles.Mr Lyne said the jobs market was likely to weaken across the country but warned some areas were particularly exposed to worsening economic conditions.Across the UK, the jobs market is going to soften, but it's looking especially fragile in South Wales and the Humber as they're particularly exposed to manufacturing businesses that are seeing big increases in their costs of materials.Resilience will come in places like Cambridge where the tech sector is based.Cambridge is expected to be one of the few areas to record employment growth during 2026, while Belfast and Edinburgh are also forecast to experience comparatively smaller declines than other major cities.Lower-income households are expected to face the sharpest increases in living costs because a larger proportion of their spending goes towards essentials including food, fuel and energy bills.In cities such as Newcastle, Belfast and Birmingham, households spend up to 13 per cent of disposable income on energy and food.That compares with less than nine per cent for the average household in London.A Labour spokesman said recent labour market data had shown signs of improvement earlier this year despite mounting economic uncertainty.He said: Recent figures show that there was an improvement in the labour market at the beginning of the year with unemployment falling below five per cent, and 332,000 more people in work than a year ago.But we cannot escape the effects of the war in the Middle East which are likely to feed through to prices and employment in the coming months.Labour also said it planned to reduce energy bills by up to 25 per cent for 10,000 manufacturers as part of its wider industrial strategy.Ministers said they remained committed to delivering the Government’s clean power target by 2030. Our Standards: The GB News Editorial Charter