A significant portion of the British population resides in areas where economic growth does not equate to improved living conditions, with a pronounced gap between the northern and southern regions, a recent report has revealed. The research by PwC highlights substantial disparities in household spending power across the UK.
Diverging Economic Fortunes
The report by PwC, released on Thursday, shows that 46% of UK households, or approximately 12.5 million homes, are situated in regions where economic advances do not enhance living standards. Regional imbalances are clear, as the North East, North West, and Yorkshire and the Humber exhibit household spending power significantly below the national average. Specifically, households in the North East fall 6.6% below, equating to £1,542 less annually, while those in Yorkshire and the Humber are short by £1,917 per year.
Regional Contrasts
Contrastively, the South East boasts spending power 9% above the norm, an uplift of £2,154 annually per household. London similarly ranks high in the nation. Thus, the familiar North-South divide persists, although disparities exist within regions; for instance, in London, affluent Richmond averages £35,448 in disposable income, nearly double that of neighbouring Hammersmith and Fulham at £18,384.
Broader Economic Context
The report underscores that economic growth does not uniformly translate into prosperity. Although Britain’s economy grew 1.2% in the first half of this year, this growth often does not enhance spending power proportionately. Typically, nations prize growth for boosting spending, jobs, and tax revenue. However, links between GDP rises and spending power are not straightforward, with only “a fraction” of GDP growth contributing to increased consumer expenditure, according to the consultancy.
Policy Impacts and Debates
Prime Minister Andy Burnham aims to address these discrepancies, yet his plans face scrutiny amid climbing government borrowing costs. His vision centres on devolution, granting local authorities greater control over revenue from local growth. Burnham’s approach is challenged by opposition leaders, notably Conservative Kemi Badenoch, who critiques the emphasis on increased government spending.
Housing and Household Dynamics
The South faces its own challenge of higher living costs, though these are partly offset by higher incomes. In contrast, Scotland and the South West enjoy slightly higher-than-average spending power due to lower housing costs and smaller household sizes, countering the prevalent trend.
This research advocates for assessing regional success not just through economic metrics but through tangible improvements in prosperity and living conditions, which aligns with Burnham’s overarching governmental goals.
Reporting based on coverage first published by bbc.co.uk.