52,000 Welsh job losses forecast in public sector cuts

Pile of coins Around 52,000 jobs could be lost in Wales due to public sector cuts, according to a new report.

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Around 52,000 jobs could be lost in Wales due to public sector cuts, according to a new report.

Accountants PricewaterhouseCoopers (PwC) forecast 52,000 jobs - 4.3% of total jobs in Wales - could go by 2015.

Wales would be one of the UK areas hardest hit by job losses, with only Northern Ireland faring worse, according to the report.

Rob Lewis, PwC chair for Wales, said the forecast demonstrated Wales' reliance on the public sector.

The 52,000 job loss forecast includes job losses in the private sector as well as the public sector.

But spending cuts could also lead to "new opportunities for growth" in the private sector according to Mr Lewis.

He said: "While this report underlines the need for the private sector in Wales to identify new opportunities for growth, it also dismisses the notion that contracts to service the public sector will dry up.

"Indeed for the right businesses in the appropriate sectors, such as outsourcing and manpower provision, a reduction in public sector manpower may open up significant opportunities."

Analysis - Nick Servini, BBC Wales business correspondent

These aren't just the direct losses in the public sector.

An acknowledgement there that there are many companies out there who are very reliant on on public sector contracts.

Over £4bn worth of goods and services that the public sector buys in Wales every year - mainly from the private sector.

The expectation is that the private sector will improve over the next five years - although it may not be as strong an economic recovery as we saw in the recession of the 1990s.

In Wales, the public sector employs around a quarter of the workforce, compared with about a fifth in England.

The UK government's comprehensive spending review on 20 October will announce cuts aimed at tackling the country's deficit.

Tax breaks

Welsh Secretary Cheryl Gillan said the private sector in Wales stood to benefit from UK government tax breaks for new businesses outside of England.

"The government is laying the foundations for economic growth by taking decisive action to tackle the deficit we inherited," she said.

"Measures we have already put in place in the emergency budget, and the comprehensive spending review process that is ongoing, are intended to stabilise the country's finances, restore business confidence, and ensure private sector growth."

"Proposals to reduce corporation tax and provide National Insurance breaks for new businesses creating new jobs outside London and the south-east, for example, will directly benefit firms in Wales," Mrs Gillan added.

For the UK as a whole, total job losses arising from the public sector spending cuts - including knock-on effects on the private sector - amount to around 3.4% of total employment in 2014/15.

At 4.3%, job loss figures for Wales are higher than the UK average.

'Deep cuts'

The deputy first minister, and minister for the economy, Ieuan Wyn Jones said the PwC report confirmed the assembly government fears that spending cuts in Wales would lead to "disproportionate" jobs losses in Wales.

"The government in Westminster don't seem to realise the impact of what they are about to announce," Mr Jones told BBC Wales.

"The problem we have is the cuts will be so deep and they will be for such a long period that it will mean that in Wales we won't have the opportunity, if you like, for the private sector to recover as these private sector cuts bite very deeply."

Pointing to the potential closure of the passport office in Newport, Mr Jones added: "That is just the first of what unfortunately many we think could come as a result of the policy now being pursued by the coalition government in London."

Summary of estimated public and private sector employment effects of public spending cuts by region (in 2014/15)

Region Absolute number of public and private sector job losses (000s) % of total jobs in region

Source: PwC analysis based on ONS regional data and HM Treasury spending plans

London

122

3.1

South East

112

3.1

North West

108

3.7

Scotland

95

4.1

Yorkshire & Humberside

82

3.7

South West

81

3.5

West Midlands

80

3.6

East

74

3.2

East Midlands

58

3.2

Wales

52

4.3

North East

43

4.1

Northern Ireland

36

5.2

UK Total

943

3.4

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