Half of Households Are Not Benefiting from Economic Growth

A recently published report revealed that nearly half of households in the United Kingdom are not benefiting from economic growth. Research indicates a significant income disparity, particularly between the north and south, with many regions having a spending power below the national average. The report prepared by PwC consultancy emphasizes that regions such as northern England, the Midlands, and Wales have a spending power below the national average, while London and the Southeast are well above this average. According to the report's findings, 12.5 million households, or 46%, live in areas where economic growth, measured by indicators such as business investment and employment opportunities, has not improved living standards. In particular, households in northeast England show that their spending power is 6.6% below the national average, resulting in an average annual loss of £1,542. In the northwest, this loss is calculated at £1,493, while in the Yorkshire and Humber region, it stands at £1,917. On the other hand, households in the Southeast have a spending power 9% above the national average, providing an annual advantage of £2,154. To assess whether economic growth is improving living standards, spending power is seen as an important metric. PwC conducts this measurement by considering income after taxes and housing costs, along with household size. The United Kingdom, which has experienced a weak growth process for many years, recorded an economic growth of 1.2% in the first six months of 2023. The government is trying to develop various policies to improve living standards and address regional inequalities. However, uncertainties regarding new Prime Minister Andy Burnham's economic strategies, combined with rising borrowing costs that will affect public spending, are leading to debates. Burnham advocates for giving more powers to local governments, suggesting that revenues generated from local growth should be utilized more effectively. However, it is emphasized that these efforts should not be limited to the growth of local economies and that this growth must also provide real welfare for people.

Source: BBC Business