THE North-East faces the bleakest job prospects in the country as the Government presses ahead with a cuts agenda and its Northern Powerhouse idea struggles to take-off, an influential report has revealed.

The Manpower Employment Outlook Survey* - used as a key economic indicator by policymakers - predicted things are about to get tougher for the region's jobseekers as employment prospects are dwindling after months of growth.

Worryingly, there is a a clear divide between the prospects for finding a job in the north compared to London and the South-East, showing that the Government's plans to rebalance the economy through the creation of a so-called Northern Powerhouse had so far "failed to ignite", the report said.

“The jobs Outlook reveals a negative picture for jobseekers in the North-East," said Amanda White, operations manager at Manpower, who believed part of the drop in recruitment intentions was being driven by the public sector, where confidence has slumped following the Government’s renewed commitment to cuts.

"A fifth of North-East workers are employed by the public sector, the highest proportion in England, so it follows that recruitment in the region is bearing the brunt of public sector pessimism," she added.

At the opening ceremony last week of Hitachi's County Durham train factory the Prime Minister and Chancellor of the Exchequer both hailed the North-East as the region creating jobs at a faster rate than anywhere else in the country. However, the latest official figures showed the region’s jobless number rose by 7,000 to 103,000, meaning the North-East has an unemployment rate of 8.1 per cent - 5.6 per cent is the national average.

Nationally, the jobs market is at its least optimistic for three years, said Manpower's survey of 2,100 employers, which suggested some firms were scaling back recruitment because of next year's introduction of a £7.20 an hour national living wage.

James Hick, ManpowerGroup Solutions UK managing director, said: "The national living wage is sending shockwaves through the UK labour market.

"An unintended consequence of the introduction of the new living wage is that firms might try to bypass the legislation altogether.

"We anticipate that some employers may look to mitigate the extra costs by taking on more younger or self-employed workers, who are not entitled to the national living wage.

"While on the surface this could be good news for youth unemployment, which currently stands at 16 per cent, it could push a greater proportion of young people into low skilled jobs, resulting in an influx of less experienced workers into social care and other sectors hardest hit by the new legislation.

"Meanwhile, candidates under the age of 25 have been asking us why it is they will be paid less despite doing equal work."

*Manpower Employment Outlook Survey measures employers’ intentions to increase or decrease the number of employees in their workforce during the next quarter. It is the longest running, most extensive, forward-looking employment survey in the world.

At -2 per cent, employment prospects in the North-East are the weakest in the country compared with the East +12%, Wales +11%, the East Midlands +10%, London +8% and the South East +6%.