A report from consultancy PwC finds that almost half (46%) of British households live in areas where economic growth does not translate into a better quality of life. According to the report, every region in the north of England, Midlands, and Wales has lower spending power than the national average, while London and the South East have significantly higher spending power. The report states that 12.5 million households are affected, with those in Yorkshire and the Humber being the worst off, having £1,917 less in spending power annually compared to the national average. The findings suggest a stark North-South divide in household spending power, with some areas within regions also experiencing significant variations in prosperity.
Written by the local model on 2026-09-03,
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Story summary
Almost half of households in Britain, 12.5 million, do not see benefits from economic growth, according to a new report by PwC. The study found that every region in the north of England, Midlands, and Wales has lower spending power than the national average, with London and the South East comfortably above. In contrast, households in the north east of England have 6.6% less spending power, equivalent to £1,542 less per year, while those in the North West are £1,493 worse off. The report highlights a stark North-South divide in household spending power, with 46% of households living in areas where economic growth does not translate into better living standards. This comes as Prime Minister Andy Burnham has pledged to tackle regional inequalities, but surging government borrowing costs may limit his room for manoeuvre at the October Budget.
Written for “Inequality in Economic Growth” on 2026-09-03,
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Almost half of people in Britain live in areas where economic growth does not translate into a better quality of life with a "stark" North-South divide in the spending power of households, a new report finds.
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report → publish → households
Researchers at consultancy PwC said every region in the north of England, Midlands and Wales had lower spending power than the country's average, with London and the South East comfortably above.
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region → say → London
The findings come as Prime Minister Andy Burnham has pledged to tackle regional inequalities in a bid to boost living standards across the country.
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Burnham → come → country
But questions remain over the PM's plans, with surging government borrowing costs set to limit his room for manoeuvre at October's Budget.
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costs → remain → Budget
The PwC report said the equivalent of 12.5 million households - 46% - lived in parts of the country where economic growth, often seen through increased business investment and job opportunities, was not leading to better living standards.
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growth → say → standards
It said households in the north east of England had 6.6% less spending power than the national average, equivalent to £1,542 less a year.
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households → say → average
Meanwhile, households in the South East were found to have spending power 9% above the national average, worth an additional £2,154 a year, followed by London.
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households → find → London
Household spending power is seen as a good measure of whether economic growth is improving living standards.
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growth → see → standards
PwC says it measures this by looking at income after taxes and housing costs, and takes into account the size and makeup of a household - which is aimed at giving a better idea of the money available to meet other expenses.
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which → say → expenses
The UK has seen years of slow growth, although the economy expanded by 1.2% in the first six months of this year, according to official figures.
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Economic growth usually means people spend more, extra jobs are created, more tax is paid to the government and workers get paid better.
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workers → mean → government
In theory, this leaves people better off.
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this → leave → people
But it takes time for the benefits to be felt, and it does not necessarily benefit everyone.
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it → take → everyone
According to PwC, "only a fraction" of a rise in GDP - the size of the economy - leads to increased spending power.
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Researchers said while there was a clear North-South divide in the spending power of households, there were also examples of spending power differences within areas deemed better off, such as London and the south east.
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For example, Richmond's average annual disposable income was the highest in London at £35,448 - almost double the £18,384 recorded in neighbouring Hammersmith and Fulham.
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income → record → Hammersmith
"The research shows just how differently prosperity is experienced across the UK, with stark variations not only between regions but on each other's doorstep," said Rachel Taylor, government and health industries leader at PwC.
Though spending power in the south of England is impacted by higher housing costs compared to the north, the hit to households on average is softened by higher incomes and the divide remains
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divide → show → incomes
, researchers said.
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researchers → say → ?
Scotland and the south west of England were exceptions to the trend, the report added, because lower housing costs and smaller households meant spending power was slightly above the national average.
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power → add → average
The report argued that the next phase of transferring power from central government to local authorities - known as devolution - "must allow local areas to retain more of the revenues generated by local growth alongside more freedom on how best to use resources".
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areas → argue → resources
But it said success "should be judged not simply by whether local economies grow, but by whether that growth leads to greater prosperity, wider opportunity and better lives for the people and communities within them".
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growth → say → them
Devolution has been a central part of Burnham's leadership so far, including his pledge to create "the conditions for good growth in every postcode".
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A government spokesperson said the creation of No10 North was part of its growth mission and would reshape "how the country is run".
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country → say → mission
"We have already announced unprecedented financial powers to English mayors so they can receive a share of income tax revenues to boost local economies and improve public services," they added.
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they → announce → services
However, Conservative leader Kemi Badenoch has said that Burnham's "diagnosis" and "theory of growth is completely wrong".
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diagnosis → say → growth
"He thinks that if government spends more money, we will all get richer - that is not how this works," she said.
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she → think → money
She has also called the establishment of No10 North a "gimmick".
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