Nine out of 10 of the UK’s cities and towns with the highest hidden unemployment rates are in the North, new study reveals.

Centre for Cities’ annual economic assessment of the UK’s largest urban areas has revealed that the record-low unemployment figures do not include a hidden army of more than three million working-aged people that are involuntarily economically inactive.

The think tank’s Cities Outlook found that the country’s actual ‘hidden’ unemployment rate is 12.1% rather than the 3.7% that is shown in the official figures.

The study also shows how the ongoing inactivity crisis is deepening regional divides across the country.

Of the 10 places with the highest hidden unemployment rates, nine are in the North of England, with one in Wales. Meanwhile, eight of the 10 urban areas with the lowest rates are in the South.

Centre for Cities chief executive Andrew Carter said: ‘Since the pandemic we have seen lots of headlines alluding to record-low numbers of job seekers but Cities Outlook shows there is actually a jobs shortage, with a significant North-South divide in involuntary inactivity rates.

‘With the UK now likely to enter a recession, the Government must address its insufficient action on levelling up so far and act swiftly to create more opportunities to get people back into the labour force.

‘This will require setting out and implementing an agenda that delivers much-needed investments in skills and public services, while supporting job creation in struggling places.’

Mayor Marvin Rees, chair of the Local Government Association’s (LGA) City Regions Board, said: 'Encouraging the estimated three million ‘hidden unemployed’ back into work or training, as highlighted in this report, will only be achieved if local leaders across our towns and cities are at the forefront of the response.

'Councils and combined authorities are central to identifying and supporting those who are economically inactive. This is through their various roles in providing services such as housing, family services, public health, adult and community learning and money advice, as well as working with partners such as housing associations, voluntary and community organisations, and in health and care.

'The Government should recognise this and include councils and combined authorities, as part of its strategy to address economic inactivity and encourage people back into the workforce.'