Geography offers no sanctuary as spending streams remain dry

Comparing the last recession with current events, planners of a certain vintage could be forgiven for feeling trapped in a spatial version of Groundhog Day.

In the early 1980s, large swathes of the north, the Midlands and the Celtic fringe took an economic hammering and many of their deprived communities have yet to fully recover. Now it is happening again.

Predictions that this would be a white-collar recession hitting the south, based almost entirely on the meltdown of the financial sector, now look misplaced. Some pockets in the south have seen soaring unemployment. It would be easy to focus on the shameless return of the bonus culture among bankers and overlook the 260,000 jobs lost in the finance and business sectors since March 2008. But in reality, the whole economy has taken a battering, with construction and manufacturing faring worst.

This week, the Institute for Public Policy Research North gave a particularly grim warning that the 1980s recession's casualties are bearing the brunt again. Areas where unemployment was already high have entered another period of decline. The credit crunch has stalled an untold number of housing-led regeneration schemes. As yet, there is no sign of the cavalry on the horizon. The pessimists think that any kind of a bounce back will not happen until 2012.

Anybody tasked with developing policies for tackling this will have to think again, particularly if private finance will not be available for the foreseeable future and developers see schemes as too risky. If the public sector cannot stump up the cash, it is hard to see a way out. Economic recovery is likely to be slow and faltering.

But there is another factor. These areas rely heavily on public spending. Not only will jobs and incomes be affected, individuals and organisations will also be spending less. In time, this means more unemployment. This penny has yet to drop with the politicians talking about public spending cuts. There will be some very difficult consequences for planning in the aftermath of a budgetary bloodbath - and some very human ones too.

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