Source - www.southwestbusiness.co.uk 27.10.10.

FINANCIAL experts are claiming that the South West is likely to escape the worst of the impact of the Comprehensive Spending Review.

According to a report on George Osborne's £83 billion package of cuts, areas in the North are going to be much harder hit than in wealthier parts of the country which are not over-reliant on the public sector.

And the report for the Public Policy Research Unit has also claimed that the cuts will help to reopen the North-South divide which dominated the UK's economy in the 1980s.

The news came as the Chancellor's recovery plans received a welcome boost, with better than expected third quarter growth figures and a crucial upgrade for the UK economy.

Gross domestic product grew by 0.8 per cent between July and September - less than the 1.2 per cent surge in the previous three months, but double the growth predicted by most economists. The figures have eased fears of a double dip recession and will reinforce government hopes that the private sector will pick up the slack created in the economy by mammoth public spending cuts.

Ratings agency Standard & Poor's added to the cheer by revising its outlook on the UK to stable from negative and confirming the UK's AAA rating.

he new survey found that the ratio of job seekers to jobs advertised is already higher in the areas where job losses are expected to be greatest, with the South West actually faring better than many other parts of the country.

The report estimates that by 2014-15 the three regions of the North will suffer job losses equivalent to 3.8 per cent of the total northern workforce, in comparison to 3.2 per cent in London and the Greater South East as a consequence of the Spending Review.

The report also argues that, with upgrades to the Tube and Crossrail taking up nearly half of the transport capital budget, capital investment is disproportionately favouring the South at a time when growing the private sector in the North is more vital than ever.

However, major transport schemes in the South West appeared to have been ignored by the Government, with only the M4 likely to have money spent on it in the near future. The report also shows that as well as job losses, benefit cuts will hurt more people in the North-East and Wales, where 20 per cent of the working-age population are claiming state support compared with 15 per cent in London, 13 per cent in the South-West and 12 per cent in the South-East.

Ed Cox, from the Public Policy Research Unit, said: "With so many people employed in the public sector or in businesses reliant on public funding plus a higher proportion of people already out of work, the North is undoubtedly in for a tough time over the next few years.

"If the Government is serious about localism, then they must radically devolve power and allow the northern regions to forge their own economic future, rather than sticking to the current system where too many people's futures are decided by a few men in Whitehall."