Household disposable incomes fell in every UK region during Q1 2023, compared to the same period a year earlier, reveals latest figures, showing that no areas of the country are immune from the cost-of-living crisis.
According to Asda’s Income Tracker, the amount households had to spend on themselves, after paying taxes and essential bills, fell by 9.2 per cent during Q1 to an average of £213 per week, compared to £236 per week in Q1 2022.
Despite the strong gross income growth at present, discretionary incomes continue to fall as prices are rising at a faster rate than net incomes.
Households in the Southeast saw the biggest fall in disposable incomes in absolute terms, down by £41 per week (18 per cent year-on-year) – from a weekly average of £227 during Q1 2022 to £186 in the first quarter of this year.
Families in Wales and Northern Ireland also experienced significant declines in disposable income as rising living costs continue to disproportionately impact the devolved nations.
Northern Ireland recorded the largest year-on-year decline in percentage terms of any region, with a drop of 21.2 per cent in Q1 2023, compared to the same period a year earlier. In real terms this means that families in Northern Ireland were £27 per week worse off across the quarter compared to the same period of 2022.
In Wales, household disposable incomes were 11.6 per cent down in Q1 compared to a year earlier, equivalent to a shortfall of £23 per week. Welsh households continue to be impacted by slow wage growth, with only the Southeast region seeing weaker growth in this area during the quarter.
It comes as Bank of England’s chief economist Huw Pill said that British households and businesses “need to accept” they are poorer and stop seeking pay increases and pushing prices higher.
Speaking on a podcast produced by Columbia law school, Pill said it’s natural for a household to seek higher wages in response to soaring energy bills, or for a restaurant to increase its prices.
However, he said the UK is a big importer of natural gas, and its price has gone up a lot compared with the exports.
“So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers.
