ITEM Club warns of 163,000 UK job losses due to energy crisis

(Sharecast News) - The ITEM Club has warned of a "broad-based labour market slowdown" with surging energy prices expected to lead to over 160,000 job losses in the UK in 2026, with all regions and most major cities being affected.

In its Spring forecast, the economic forecasting group predicted that the conflict in the Middle East will weigh heavily on the UK economy through higher energy prices, tighter fiscal conditions and significant supply chain disruption.

This is expected to result in a 0.4% decline in overall employment, representing the net loss of 163,000 jobs.

Losses are likely to be concentrated in energy-intensive and demand-sensitive sectors, the ITEM Club predicted, particularly manufacturing, retail, construction and hospitality, as firms deal with rising input costs and the squeezed household spending.

Meanwhile, industrial regions like Wales and Yorkshire and the Humber will be most exposed to these cost pressures, while cities reliant on consumer spending will see job losses as a result of weakened demand.

London will see the largest drop in jobs (-25,000), with similar pressures expected to be felt in Birmingham (-12,500), Leeds (-9,800), and Glasgow (-6,200).

In contrast, Belfast and Edinburgh are expected to be more resilient, with only limited job losses, and Cambridge is the only large urban area predicted to see a net improvement.

"If the Middle East conflict is prolonged, lower-income areas are particularly exposed, as higher spending on essentials and transport will reduce discretionary consumption, weakening local demand and placing additional pressure on local economies," the Spring forecast said.