UNEMPLOYMENT levels will continue to rise in the region if public sector cuts are made too soon, the South West Regional Development Agency's chief economist has warned.

Nigel Jump said the public sector, including defence and healthcare, had provided an economic buffer that had relatively cushioned the impact of recession on the region, but that could not be relied on to continue in the future.

"I would be surprised if we got rid of the level of unemployment built up over the past 12 to 18 months," he said. "The main danger is it could be higher, because of the cuts to the public sector."

He said cuts implemented after the budget in March would come too soon for the region's recovering private sector to take the strain.

Commenting on the RDA's Quarterly Economics Review, Mr Jump said the region was poised for "muted" recovery throughout 2010.

"We did not fall as far as some regions in the recession but we are also not coming out of it as fast," Mr Jump said.

"This relative pattern might be expected but it remains a matter of some concern the South West will be a follower, rather than a leader, in the recovery."

In the past quarter, the South West output and employment readings have slipped below the UK average in the Purchasing Managers' Index of regional economic activity.

"Many South West companies still talk of weak demand, spare capacity and cost pressures on margins," he said.

"As a result, job shedding, albeit at a slower rate than earlier, is more likely than new hiring."

Mr Jump said "carefully managed" cuts across the public sector, together with signs that interest rates are beginning to move in the right direction, could prevent the economy tipping over the edge into a "double dip" and growth would continue, despite impediment. "In a year's time, I would hope we will have seen another four quarters of growth," he added.

Enterprises predominantly within the SWRDA region's easterly remit including Swindon and Bristol, he said, had borne significant impact of global recession upon their exports, but – with a careful eye upon the euro – would begin to pick up as the world economy strengthens and the pound remains weak.

Westcountry businesses – particularly those using new technologies and knowledge-based – are also beginning to fare relatively well. "Some have told us they are doing fine," said Mr Jump.

"Hopefully, they will grow and that will spill out to the rest of the economy."

Public sector cuts are also likely to hit the RDA itself.

Mr Jump said with the agency already facing budgetary constraints, it would maintain a focus upon creating networks to bring regional public and private enterprise together to "boost their fundamental competitiveness", but "might not have huge amounts to spend".