THE North-East’s most deprived areas have been hardest hit by the recession and are set to suffer a triple whammy, according to a report.

The report, called The Impact of the Recession on the Northern City Regions, by the Northern office of the Institute for Public Policy Research (ippr) think tank, shows that areas which suffered the highest unemployment rates in March last year have experienced the biggest increase in unemployment since then.

It states that the Tees Valley has had one of the biggest increases in unemployment in the country since the start of the recession, while rural areas such as North Yorkshire have experienced the smallest increases in unemployment.

The report’s authors believe deprived areas may become caught in a vicious circle where those with the lowest employment see housing-led regeneration schemes scrapped at the same time jobs are lost from manufacturing industries.

It argues the most deprived areas have an above-average reliance on manufacturing jobs that are the most vulnerable to low-cost competition from abroad. Unemployment was already high in these areas because companies were closing and cutting costs as a result of such competition, but the recession has accelerated the process.

Added to this is the prospect of a squeeze on public spending, with the North-East being described as the most vulnerable region in England, because public spending is equivalent to 52 per cent of the Gross Value Added in the region – compared with a national average of 38 per cent The report believes that the combination of factors could see the most deprived areas hit by a triple-whammy.

It stated: “A sort of vicious circle might be developing as regeneration developments are delayed in areas with weakness in the local economy due to their dependence on declining manufacturing industries, leading to less employment, which in turn creates more economic weakness.”

The North-East has seen the second biggest rise in unemployment, after Northern Ireland, since March last year, giving it the highest unemployment rate in the country.

Ed Cox, director of ippr North, said: “Further steps must be taken to ensure that the North’s old dependencies on low value-added manufacture and public sector employment are broken.

“If this is to be achieved, the Northern regions must attract the jobs of the future in areas such as green and creative technologies. And to make a real impact on deprivation, efforts should be clearly targeted at areas of most stubborn deprivation like Hull, Liverpool and South Teesside, which have the highest unemployment rates within the northern city regions.”

In 11 wards in the Tees Valley, where unemployment rates were significantly higher in March last year than the national average of 2.2 per cent and the average for the area, of 3.8 per cent, unemployment has increased by four per cent since the recession began, against a national average increase of two per cent.

In the Tees Valley, there are only five wards out of 116 where unemployment has increased by one per cent or less and these all had below average unemployment for the area when the recession began.

The wards with the biggest increase in unemployment include Portrack and Tilery in Stockton, jumping from 9.1 per cent to 15.2 per cent and Park East in Darlington where it has leapt from 4.7 per cent to 9.5 per cent.

The report also argues that there is a North-South divide.

With the Northern City regions, divided into 26 areas for statistical purposes, 23 had unemployment rates over the national average in March last year.

Of those, south Teesside has one of the three highest unemployment rates.