AS MANY as 130,000 East Midlands jobs could be axed in the next two years due to the economic downturn, a new study predicts.

The Local Government Association estimates that six per cent of East Midlands' workers will lose their jobs if no action is taken.

The figures show that up to 1.73m jobs could go across England by December, 2010.

The construction and manufacturing industries will be the hardest hit, but high-skilled industries look set to remain relatively unscathed.

Coun Margaret Eaton, chairman of the Local Government Association, said: "The recession is going to hit different parts of the country in different ways.

"It is clear that a national, one-size-fits-all approach to dealing with the recession simply isn't going to work. Research shows that the fastest way out of recession is for more decisions about the economy to be taken at local level, which means councils continuing to work with local people and businesses."

The forecast follows research into how well local economies fared during the last two recessions.

The report is due to be published at a credit crunch summit being in London later today.

For reaction see tomorrow's Business Post.