Almost half of households in Britain reside in areas where economic growth does not lead to an improved quality of life, according to a new report from consultancy firm PwC. The analysis, published on Thursday, identifies a significant North-South divide in household spending power.
The report states that 12.5 million households, or 46% of the total, live in parts of the country where increased business investment and job opportunities are not translating into better living standards. Regions in the North of England, the Midlands, and Wales all recorded lower spending power compared to the national average, with London and the South East significantly above it.
Specifically, households in the North East of England have spending power 6.6% below the national average, equating to £1,542 less per year. The North West is £1,493 less, and Yorkshire and the Humber are the most affected, with spending power down £1,917 annually. In contrast, households in the South East have spending power 9% above the national average, an additional £2,154 per year.
PwC measures household spending power by considering income after taxes and housing costs, adjusted for household size and composition, to assess money available for other expenses. The report notes that while there is a clear North-South divide, spending power differences also exist within seemingly better-off areas, such as London and the South East.
Prime Minister Andy Burnham has pledged to address the cost of living and regional inequalities. However, questions remain regarding the economic policies, with rising UK government borrowing costs potentially affecting public spending decisions. Conservative leader Kemi Badenoch has criticised Burnham's approach, stating his "theory of growth is completely wrong."