Regions like Wales, Northern Ireland and the North-East will be hit harder than London and the South-East due to cuts to the public sector, according to the centre for economics and business research (CEBR).

The CEBR anticipates that the private sector recession will be followed by a public sector recession and severe cuts in public spending over the next five years will particularly hit those parts of the country (North, North-West, Scotland, Wales and Northern Ireland) which heavily depend on public sector spending and jobs.

 Public spending share of GDP by region, FY 2008/09

Source: cebr analysis of HM Treasury data

Jörg Radeke, one of the report’s authors and an economist at cebr, says: “The private sector recession will be followed by a public sector recession as the government is forced to balance its books.

“The impact will be felt particularly hard in those regions where public expenditure is the main contributor to economic output. The consequence is a two-tier recovery, which will see income levels in the North and Wales lagging further behind London and the South-East.”