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A recent report reveals that nearly half of the population in Britain resides in areas where economic growth fails to improve the quality of life, highlighting a pronounced North-South divide in household spending power. According to analysis by consultancy PwC, regions across Northern England, the Midlands, and Wales all fall below the national average in spending capacity, while households in London and the South East enjoy significantly higher levels. These findings coincide with Prime Minister Andy Burnham’s commitment to addressing regional disparities in an effort to enhance living standards nationwide.
PwC’s research indicates that approximately 12.5 million households—around 46% of the country—live in locations where increased economic activity, such as greater business investment and more employment opportunities, does not translate into higher living standards. The report notes that households in the North East have 6.6% less spending power than the UK average, equating to about £1,542 less per year, with the North West behind by £1,493 and Yorkshire and the Humber showing the largest deficit at £1,917. In stark contrast, households in the South East exhibit spending power 9% above the national average, roughly £2,154 more, closely followed by London.
Spending power, which measures disposable income after taxes and housing costs and accounts for household size and composition, serves as a key indicator of whether economic growth is truly benefiting residents. Though the UK’s economy grew by 1.2% during the first half of the year, PwC cautions that only a small portion of increased GDP results in heightened spending power. The report also highlights notable inequalities within ostensibly prosperous areas—for example, in London, where Richmond enjoys an average disposable income of £35,448 annually, nearly twice as high as neighbouring Hammersmith and Fulham at £18,384.
The study further points out that despite higher housing costs in southern England, these are offset by larger incomes, which maintains the existing divide. Exceptions to these trends include Scotland and the South West, where lower housing expenses and smaller household sizes contribute to spending power slightly above the national average. PwC emphasizes that ongoing devolution efforts should grant local authorities greater control over revenues and resources to ensure that economic growth translates into tangible improvements in prosperity and opportunity for local communities. While Burnham champions devolution as a centerpiece of his leadership, aiming to foster “good growth in every postcode,” Conservative leader Kemi Badenoch disputes his approach, dismissing it as flawed and calling initiatives like No10 North little more than “gimmicks.
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