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PwC report shows growth is not reaching households evenly

According to a new report published in the United Kingdom, economic growth is not feeding through directly into household living standards across much of the country. Consultancy PwC said 12.5 million households — 46% of the total — are in areas where growth has not resulted in a better quality of life.

The research found that household spending power remains below the national average, especially in the north of England, the Midlands and Wales. By contrast, London and the South East were said to sit well above average.

How wide are the regional gaps?

  • In the North East of England, spending power is 6.6% below the national average, equal to £1,542 a year.
  • In the North West, the gap was calculated at £1,493.
  • Yorkshire and Humber recorded the weakest picture, with an annual shortfall of £1,917.
  • In the South East, household spending power is 9% above the national average, meaning an additional £2,154 in annual purchasing power.

The report also stressed that inequality within the country is not limited to regions, but is visible within the same cities as well. In London, average annual disposable income in Richmond reached £35,448, while in neighbouring Hammersmith and Fulham it stood at £18,384.

How was spending power measured and what do the figures show?

PwC calculated household spending power using income after taxes and housing costs, while also taking household size and composition into account. The method is designed to show how much money remains for other expenses after essential payments.

Official data show that the UK economy grew by 1.2% in the first six months of this year. However, the report said only a limited share of the increase in gross domestic product has been converted directly into household spending power, meaning growth has not benefited everyone equally.

Scotland and the south-west of England were exceptions to the broader trend. Lower housing costs and smaller household sizes meant spending power in those areas was measured slightly above the national average.

Government budget choices and devolution debate come into focus

At the time the report was published, Prime Minister Andy Burnham is pledging to improve living standards by tackling the cost of living and regional inequality. But questions remain over economic policy as rising UK government borrowing costs could limit room for manoeuvre in public spending.

PwC argued that in the next stage of devolution, local authorities should receive a larger share of the income generated in their areas and have more freedom to use those resources. The government said local economies would be supported through the “No10 North” initiative and by giving English mayors a share of income tax revenues. Conservative Party leader Kemi Badenoch, in opposition, criticised the approach.

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