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The economic gap between cities doing relatively well during the economic downturn and those that have been hard hit by the recession, is expected to widen.

A report by the Centre for Cities, a research and policy organisation focused on improving the economic performance of UK cities, suggests that a combination of weak growth in the private sector and massive public sector job cuts is affecting different parts of the country very differently.

Cities such as Aberdeen, Cambridge, Edinburgh, London and Milton Keynes are expected to weather the downturn well, while Newport, Sunderland, Hull, Doncaster and Swansea are among the worst affected cities.

Many of the struggling cities are located in the north of England and the Midlands.

Employment is a key factor in determining how well cities are performing, with those with a high percentage of their population employed in professions such as law, finance and accountancy doing much better than those where the private sector is less dynamic.

Cities such as Aberdeen and Cambridge have a high number of business start-ups and tend to be more innovative, while the poorer performing cities have proportionally more people claiming Jobseekers Allowance and working in the public sector.

The Centre for Cities is calling on the government to support struggling cities by providing high-quality training so that their residents have the skills they need to find jobs and start businesses.

Alexandra Jones, Chief Executive of Centre for Cities, said: “During 2012 cities should take the lead in shaping their local economies, and the Government should give them the financial and political powers they need to make the right decisions for growth.

“Where cities face greater social and economic challenges, the government should offer support to help places adapt and respond to a rapidly changing global economy.”

Pessimism over the UK economy persists with the latest figures expected to show that the economy contracted in the fourth-quarter.

The Bank of England is expected to announce a further round of Quantitative Easing as early as next month.

Asian markets moved higher across the board in early trading.

The biggest news out of those markets comes from Australia, which shed 29.3K jobs in December compared to expectations of a 10K increase. But unemployment declined from 5.3% to 5.2%, and the number of people looking for part-time work also declined.

These numbers may be explained by declining participation in an aging workforce. Australia’s population is aging, and the participation rate declined by 0.3% in December. 

UPDATE: Those gains are growing across the board, except in Australia where they’re holding steady.

Check it out:

Japan’s Nikkei: +1.32%

Korea’s Kospi: +1.09%

Australia’s S&P/ASX 200: +0.35%

Hong Kong’s Hang Seng: +1.27%

U.S. futures have also moved slightly positive.

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See Also:

• WAKE UP: Global Stocks Are Mixed Despite More Bad News
• S&P TO ASIA: You’re Next
• Dow Instantly Off 100, Investors Piling Like Crazy Into German Bonds

Complaints to the Financial Ombudsman Service (FOS) from consumers who were mis-sold payment protection insurance (PPI), increased by 57 per cent to 30,301 between October and December 2010, compared with the previous three months.

PPI complaints now make up 54% of the FOS’s workload.

The FOS, which only deals with PPI complaints that financial firms have failed to resolve, ruled in favour of the customer in 68 per cent of the cases it dealt with in the final three months of 2011.

This is a significant fall from between July and September 2011, when it ruled in favour of the customer in 92 per cent of cases.

Millions of PPI policies were routinely sold with mortgages, loans and credit cards from the 1990s.

The insurance is designed to meet credit payments if the policy holder is unable to pay due to illness or unemployment, but millions of people were sold policies that were invalid because they did not fulfil the qualifying criteria.

Some policies were sold to people who did not need them and many people did not realise that the insurance was optional.

For years the banking industry refused to admit that PPI had been mis-sold, but was forced in May 2011 to adhere to the Financial Services Authority’s (FSA’s) demand that past sales of the policies should be reviewed.

The FSA also said that future sales of PPI should be much more strictly regulated.

Earlier this month the FOS said it was disappointed at the number of customers still waiting for financial companies to deal with their PPI complaints.

It is considering introducing a fee of £350 for dealing with PPI cases, which firms would have to pay in addition to a £500 standard case fee.

The rate of Consumer Prices Index (CPI) inflation fell to 4.2 per cent in December, from 4.8 per cent in November, according to the latest figures from the Office for National Statistics (ONS).

This is the third consecutive month that inflation has fallen and December’s figures represents the biggest monthly fall since April 2009.

Inflation is now at its lowest level since June last year and many economists are predicting a continued decline throughout the year.

In November, the Bank of England predicted that inflation would fall below the Government’s inflation target of 2 per cent by the end of this year.

Retailers’ attempts to generate sales by cutting prices in the run-up to Christmas have helped to push inflation down.

The price of clothing and footwear fell by 2.8 per cent between November and December and fuel prices fell by 1.1 pence a litre, although food prices increased by 1.4 per cent.

Although the fall in inflation will help to ease the strain on household incomes, analysts expect consumers to continue to control their spending in the face of continuing uncertainty over jobs and tightening credit conditions.

While there was good news on inflation today, a worrying economic forecast by the Ernst & Young Item Club suggests that the UK economy has fallen into a ‘technical’ recession due to the eurozone crisis and rising unemployment.

The Item Club has cut its GDP growth rate forecast from 1.5% to 0.2% for 2012 and expects unemployment to rise by a further 300,000 this year, to just below three million people

It does not expect the UK economy to recover until CPI inflation drops to 2 per cent late this year.

The Chartered Institute of Personnel and Development expects unemployment to remain above 2.5 million until at least 2016.

The Financial Ombudsman Service (FOS) has criticised banks and insurance companies for their slow response to payment protection insurance (PPI) compensation claims.

The huge numbers of PPI claims are overwhelming UK banks, with the result that customers are becoming tired of waiting and are taking their cases to the FOS.

The FOS says that number of PPI cases on its books has doubled to 130,000 in the financial year 2012/13, from 60,000 in 2010/11 and this type of case now makes up half of its workload.

Consumers were routinely sold PPI alongside credit cards and loans and were told the policies would cover their repayments in the event of sickness or unemployment.

However many people, including pensioners and the self-employed, were sold policies that were useless to them because they did not meet the qualifying criteria.

Following a High Court ruling in May 2011, more than three million people were eligible for compensation, with the total costs expected to reach up to £9m.

To help it cope with its inflated workload, the FOS wants firms with more than 25 cases of PPI mis-selling made against them to pay an additional fee of £350 fee for each case.

However, it has promised to waive fee for firms with 25 complaints or less.

Tony Boorman, principal ombudsman, said: “It’s disappointing that there’s little finality for significant numbers of consumers who are still waiting for their bank or insurer to deal with their complaint.

“When consumers and businesses alike are tightening their belts and facing uncertainties this is not welcome news for anyone.”

In the first 10 months of 2010 more than £1 billion was paid out in compensation to customers who were mis-sold PPI.