A significant rise in unemployment ahead for the UK

An excellent stimulus article in the Guardian for business students last Thursday highlights the potential impact of looming government spending cuts on UK unemployment.

Students of the recent recession in the UK will know that one of the reasons why UK unemployment did not rise as fast or as high as initially predicted was the continued growth in government spending during the downturn. The political landscape is now very different and we seem set to enter a period of sustained austerity - with those working in the public sector likely to be hit hardest. Public sector pay is unlikely to rise (students can make the link to consumer spending) and hundreds of thousands of jobs are expected to be lost. The respected CIPD estimate that around 100,000 public sector jobs will go during the remainder of 2010 with the total rising to 750,000 by the end of 2010.

A good exercise for business students is do a connectives exercise that helps them work through the implications of cuts in government spending & rising unemployment on business. Which sectors are likely to be hardest hit by lower public spending and why? What are the implications for certain areas of the UK if public sector employment falls, as predicted, by up to 15%?