Economic recovery spreads beyond London according to Asda’s latest Income Tracker
- Household spending increased year-on-year in every region of the UK in March; Northern Ireland and the North East saw some of the biggest gains, helping to close the gap with London
- Cost of living in London is rising faster than elsewhere in the UK, holding back spending power growth in the Capital
- The average UK household had £170 a week of discretionary income in March 2014, up £7 a week year-on-year, the sixth month in a row that families have seen their household incomes rise
- The increase in spending power was driven by unemployment falling to its lowest rate in five years in the month of March – down by one percentage point year-on-year and a slowdown in the rate of inflation thanks to a huge fall of 6.6% in petrol prices
The latest Asda Income Tracker has revealed that the effects of the economic recovery are starting to be felt across the UK with discretionary incomes now rising in every region. Northern Ireland and the North East experienced some of the strongest growth in the three months to March, rising 4.8% and 5.5% respectively, with the North East benefiting from rapidly rising wages in the construction and manufacturing industries, which the region relies on.
While London’s discretionary income still stands well above the national average at £231 in the three months to March, the growth in the capital’s spending power slowed to just 2.8% year on year, allowing other regions to start playing catch-up. The slowdown in the Capital’s spending power was driven by its dependence on the troubled financial and banking industries in addition to London’s spiralling cost of living.
The latest Asda Income Tracker also revealed that families had £7 a week more discretionary income in March 2014 than in the same month the year before. The rise in discretionary income – the income left once taxes and the spend on essentials like rent, utilities and bills have been deducted – is the largest increase seen since September 2012, boosted by rising wages, falling unemployment and a slowdown in the rate of inflation.
The average UK family had £170 a week of discretionary income in March 2014 – 4.3% more compared to the same month last year – and edging closer to the record high of £174 seen in January 2010. The rise in household spending power, which has been slowly increasing every month since October, highlights that families across the UK are beginning to see the economic recovery translate into more money in their pockets.
Falling unemployment, which dropped below 7% in March for the first time since 2009, helped to boost household finances with more than 30 million people now in work – 691,000 more than last year. In addition to more people in work, family spending power was also supported by rising wage growth. The rate of inflation slowed even further in March, dropping well beneath the 2% Bank of England target to 1.6%, helped in large part by a 6.6% fall in the cost of petrol.
Commenting on the findings, President and CEO of Asda, Andy Clarke, said: “In recent months I have been keen to point out that recovery cannot just be focussed on London and the South East – which is why I am delighted to see that this month, regions like the North East and Northern Ireland are finally enjoying a step on in their recovery.
“With household spend increasing for the sixth month in a row, there now appears to be a real momentum behind the economic recovery and this is being felt across all regions of the UK.”
Clarke added: “Spending power is growing and unemployment is falling. Importantly though, these factors are combined with a fall in the price of petrol and food inflation, meaning that families have more breathing space when balancing the budget.”
Rob Harbron, Senior Economist, Cebr, said: “It is encouraging to see a further increase in household spending power, as the Asda Income Tracker saw its fastest growth rate since late 2012.”
“A slowdown in inflation coupled with accelerating wage growth is helping to raise the average household spending power. Moreover, robust economic growth is expected to continue, which means it is likely that discretionary incomes will continue to rise over the coming months.”