Household spare cash is falling across the UK

Household disposable income fell in every part of Britain this year as millions struggle with tight budgets.

Across Britain, the amount households had to spend after taxes and essential bills fell by 9.2 per cent in the first three months of 2023.

That means the average household has an average of £213 left over a week, compared to £236 a year ago.

The drop is because prices are rising faster than wages, according to the Center for Economics and Business Research’s Asda Income Tracker.

Households in the South East saw the biggest fall in disposable income in absolute terms, down £41 per week, or 18 per cent, per annum.

Here, average household disposable income fell to £186 a week in the first quarter, compared to £227 a week at the same point last year.

People in Wales and Northern Ireland also saw a large drop in disposable income due to the rising cost of living.

Northern Ireland recorded the largest annual decline in percentage of any region, with a 21.2 percent decline compared to a year ago.

In real terms, this means households in Northern Ireland were £27 a week worse off compared to the same period of 2022.

In Wales, household disposable income in the first quarter was 11.6 percent lower than a year earlier, equivalent to a deficit of £23 per week.

London households have the highest weekly disposable income, hovering around £300.

In the capital, household disposable income is down by around £21 compared to a year ago.

“Get used to it,” the British said

This week Huw Pill, the Bank of England’s top economist, said people in the UK need to accept that they are poorer or prices will continue to rise.

Pill told a US podcast that there was an “unwillingness to accept that, yes, we’re all worse off.”

He said that in response to higher bills and other rising costs, workers had responded by asking for wage increases and companies were charging more.

UK inflation, the rate at which prices are rising, stood at 10.1 per cent in the year to March 2023, which is well above the government’s target of 2 per cent.

The rate fell from 10.4 percent last month. But that doesn’t mean prices are falling – they’re just rising at a slightly slower pace.

Inflation in food and non-alcoholic beverages accelerated again in March, reaching 19.2 percent, a 45-year high.

Income rises, but is swallowed up

While household disposable income is falling, gross annual income is rising.

Income growth accelerated in the first quarter of 2023, reaching 5.5 percent, the Asda Income Tracker suggests. The total average household income was £934 over the period.

The report added: ‘The quarterly acceleration in gross income growth was seen in most regions, with the exceptions of London and the South East.

All regions saw faster gross income growth in the first quarter of 2023 compared to the same quarter of 2022.

Scotland saw the fastest growth in gross income during the period, while the South East of England saw the smallest increase, at 4.7 per cent.

According to the report, price increases spurred workers to push for pay increases, aided by a lack of staff in many industries.

Average expenditure on basic needs such as accommodation, food and utility bills was £580 per week, while the average tax paid reached £144 per week.

The price of the basket of goods tracked by the Asda Income Tracker rose 13.3 percent in the year to March, outpacing the headline inflation rate by 3.2 percentage points.

The Center for Economics and Business Research said it expects headline inflation to decline gradually over the course of the year, but to remain above 4 percent this year.