163,000 UK Jobs at Risk – These Areas Will Be Hit Hardest

Britain is expected to lose around 163,000 jobs this year as the economic shockwaves from the Iran war continue to impact businesses, energy prices, and household finances across the country, according to a new economic report.

The latest regional outlook from the Item Club warns that lower-income regions are likely to suffer the most severe consequences, particularly areas heavily dependent on manufacturing and construction industries. South Wales and the Humber are forecast to experience some of the sharpest employment declines due to soaring energy costs and supply chain disruption linked to instability in the Middle East.

The report predicts that South Wales could lose approximately 5,700 jobs during 2026, while the Humber may see employment fall by 2,800 positions. Economists say industries reliant on energy-intensive production are struggling to cope with rising operating costs and weaker consumer demand.

Tim Lyne, economic adviser to the Item Club, said poorer regions are especially vulnerable because households there generally have fewer savings to absorb higher living costs. As spending weakens, sectors such as retail and hospitality are also expected to face growing pressure.

Nationwide, employment is projected to decline by 0.4% this year. The report attributes the downturn to rising fuel and material prices, expensive energy bills, disrupted shipping routes, and reduced consumer confidence.

Major cities are also expected to feel the impact. London could lose around 25,000 jobs as retail and hospitality activity slows, while Birmingham may see a decline of 12,500 jobs. Leeds is forecast to lose nearly 9,800 positions, with Glasgow expected to shed around 6,200 jobs.

However, the report highlighted a few areas showing stronger resilience. Cambridge is expected to record employment growth due to its expanding technology sector, while Belfast and Edinburgh are predicted to experience relatively smaller losses compared to other regions.

The Item Club also warned that the conflict could widen inequality across the UK. Lower-income households spend a larger share of their income on essentials such as food, fuel, and electricity, making them more vulnerable to inflation caused by global instability.

According to the report, families in cities like Newcastle, Belfast, and Birmingham spend up to 13% of their disposable income on energy and food, compared with less than 9% for the average London household. Economists fear these pressures could intensify if tensions in the Middle East continue.

A government spokesperson acknowledged the growing risks but pointed to recent labour market improvements, including unemployment remaining below 5% and more than 332,000 additional people in work compared with the previous year.

The government also pledged support for businesses and households through measures aimed at lowering energy costs for manufacturers and accelerating plans for cleaner domestic energy production to reduce reliance on volatile fossil fuel markets.