It is not just London jobs that are vulnerable to current economics problems according to an analysis just published by Oxford Economics1. The study looks at which industries are most at risk in today's uncertain economic climate and finds that the most exposed are banking, supplier industries to banking, construction, retail and car sales.
According to Neil Gibson, Director of Regional Services at Oxford Economics, "The current economic uncertainties are due to two distinct phenomena. One is the credit crunch, which is leading to a contraction of banks' lending activity and the other is the fall off in consumer confidence, which is associated with the squeeze on discretionary spending due to rising food and energy costs and higher mortgage rates as well as uncertainty over job prospects. This means that jobs in banking and retail are especially vulnerable at the moment together with jobs in construction and property which are susceptible to the weakness of the housing market and a potential fall off in office and retail developments".
The industrial analysis was used to assess risk exposure at the sub regional level by looking at the Local Authorities where the vulnerable industries formed the biggest share of total employment. As might be expected, the biggest threat is to jobs in London with the City, Tower Hamlets and Kingston on Thames showing up as the most as risk with Westminster, Kensington and Chelsea and Camden also in the top twenty most at risk Local Authorities. Outside London, however, it tends not to be the big city jobs that are most at risk as many cities have a sufficiently diverse labour market that can provide a degree of insulation. Fourth on the vulnerability ranking is Chester followed by Bournemouth with Watford seventh, Northampton at ten and Calderdale at eleven. Spelthorne, South Oxfordshire, Peterborough, Torbay, Milton Keynes, Swindon and Macclesfield also show up in the list of the twenty most vulnerable Local Authorities with Bristol, at twentieth, being the only big city outside of London in the list.
Neil Gibson, Director of Regional Services at Oxford Economics added "When many people think of the credit crunch they automatically think of the City of London and Canary Wharf but, while these centres are undoubtedly vulnerable, many parts of the country are now heavily reliant on financial services. The collapse in mortgage lending, and a static market for consumer credit together with widespread cost reductions in many retail banks means that the impact of the credit crunch could be far more widespread than just London. In addition, the knock on effects on business services and construction and the anticipated retail slowdown will affect many areas".
He added that, "Many of these centres are reliant on one or two major financial services employers and, while we have no reason to suspect that any of them in particular are in trouble most financial services companies are likely to be subject to cost cutting pressures and natural reductions in jobs at best over the next twelve months".
Interestingly, most big cities, apart from London faired relatively well in the index with only Edinburgh, Bristol and Newcastle showing up in the top forty most vulnerable Local Authorities and Leeds, Cardiff, Glasgow, Manchester, Nottingham, Sheffield, Birmingham and Liverpool coming in at 44th, 74th, 86th, 94th, 112th,129th and 199th respectively. In the longer run, however, the problems resulting from the credit crunch in relations to lending and availability of finance may well have a more far reaching impact on urban centres through a restriction of urban renaissance development and re-generation schemes.
For further information contact:-
Neil Gibson
Tel no. 0844 979 2356
email : ngibson@oxfordeconomics.com
Alan Wilson
Tel no. 01865 268 904
email: awilson@oxfordeconomics.com
