Birmingham is projected to lose 12,500 jobs this year as a result of economic challenges stemming from the ongoing Iran War, according to a new report by the Item Club. Nationally, the UK could see up to 163,000 job losses, with lower-income areas expected to bear the brunt of the downturn.
The Item Club’s latest regional outlook highlights that South Wales and the Humber, two of the UK’s poorest regions, are particularly vulnerable. Both areas depend heavily on manufacturing and construction industries—sectors now contracting due to soaring energy prices and supply chain disruptions linked to the Middle East conflict.
Specifically, South Wales is forecasted to shed 5,700 jobs, while the Humber could lose 2,800 roles over 2026. Tim Lyne, economic adviser to the Item Club, emphasized that these regions will experience the harshest effects: “Low-income regions with significant manufacturing and construction presence will reduce headcount amid rising operational costs and supply instability. With limited savings, consumers in these areas will reduce spending, hurting retail and hospitality sectors.”
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The report estimates a 0.4% decline in UK employment this year, equating to a net loss of 163,000 jobs. This decline is driven by decreased consumer spending, escalating fuel and energy prices, and continued disruption to materials and shipping. The Bank of England recently warned that unemployment may rise to 5.6% in 2024 from the current 5.2%, underscoring a grim outlook tied to conflict-related economic strains.
Urban centres will also feel the pinch, with London projected to lose 25,000 jobs as retail and hospitality slow, while Birmingham, Leeds, and Glasgow are expected to face losses of 12,500, 9,800, and 6,200 jobs respectively. There are some hopeful signs: Cambridge’s tech sector may support job growth, while Belfast and Edinburgh are expected to experience comparatively minor job losses.
Lyne noted, “The overall UK jobs market is softening, with regions reliant on manufacturing seeing the steepest declines. Resilience is likely in tech-driven areas such as Cambridge.” While public sector roles in education, health, and administration are expected to increase, these gains won’t offset the widespread job cuts in other areas.
The report also warns of a growing divide in living standards across the UK as the Iran War pushes up the cost of essentials. Low-income households, especially in cities like Newcastle, Belfast, and Birmingham, spend a larger share of income—up to 13%—on food and energy compared to under 9% for the average London household. This disparity may leave these communities particularly exposed if the conflict persists.