Nearly half of all households in Britain—approximately 12.5 million families—are living in areas where economic growth fails to translate into improved living standards. A new report from consultancy PwC highlights a stark regional divide, noting that while national economic expansion is often measured by business investment and job creation, these benefits are not being felt equally across the country.
The data reveals that every region in the north of England, the Midlands, and Wales currently experiences lower household spending power than the national average. In contrast, London and the South East remain well above this benchmark. Specifically, households in the North East face 6.6% less spending power than the national average, amounting to a shortfall of £1,542 annually. The North West trails by £1,493, while Yorkshire and the Humber are the most disadvantaged, with spending power down by £1,917 compared to the national average.
Conversely, the South East enjoys spending power 9% higher than the national average, providing an extra £2,154 per year, with London also performing strongly. PwC defines spending power by calculating income after taxes and housing costs, adjusted for household size and composition to better reflect actual disposable funds. While higher housing costs in the south do impact residents, researchers noted that higher average incomes in these areas effectively soften the blow, maintaining the regional disparity.
Scotland and the South West of England serve as notable exceptions to the trend, as lower housing costs and smaller household sizes keep their spending power slightly above the national average. Rachel Taylor, who leads government and health industries at PwC, observed that prosperity is experienced very differently across the UK, with significant variations occurring not only between regions but even between neighboring communities. For instance, average annual disposable income in Richmond is £35,448, nearly double the £18,384 recorded in nearby Hammersmith and Fulham.
Prime Minister Andy Burnham has made addressing these regional inequalities a central pillar of his leadership, pledging to foster conditions for growth in every postcode. His strategy relies heavily on devolution, with the report suggesting that transferring further power to local authorities must allow them to retain more locally generated revenue. A government spokesperson stated that the establishment of “No10 North” is a key component of this mission to reshape national governance, adding that unprecedented financial powers have already been granted to English mayors to boost local economies.
However, the government faces significant political and economic hurdles. Questions persist regarding the Prime Minister’s ability to deliver on these promises, particularly as surging government borrowing costs are expected to constrain his options during the upcoming October Budget. Furthermore, the UK has experienced years of sluggish growth, and even with a 1.2% expansion in the first half of this year, PwC warns that only a fraction of GDP growth typically filters down to actual household spending power.
Conservative leader Kemi Badenoch has sharply criticized the government’s approach, labeling the creation of No10 North a “gimmick.” She argued that the Prime Minister’s diagnosis of the economy is fundamentally flawed, stating, “He thinks that if government spends more money, we will all get richer – that is not how this works.”
Ultimately, the report emphasizes that economic success should be measured not just by the growth of local economies, but by whether that growth results in greater prosperity, broader opportunities, and improved lives for the people residing within those communities. The report also notes that often seen through increased business investment and job opportunities, was not leading to better living standards, the PwC report said the equivalent of 12.5 million households – 46% – lived in parts of the country where economic growth. The report also notes that and takes into account the size and makeup of a household – which is aimed at giving a better idea of the money available to meet other expenses, pwC says it measures this by looking at income after taxes and housing costs. The report also notes that although the economy expanded by 1.2% in the first six months of this year, according to official figures, the UK has seen years of slow growth. The report also notes that in theory, this leaves people better off. The report also notes that we have already announced unprecedented financial powers to English mayors so they can receive a share of income tax revenues to boost local economies and improve public services,” they added. The report also notes that have you been affected by issues covered in this story.
Comments