PwC report reveals north-south divide impact of recession

Thursday, 10 November 2011 09:38

A new report from PricewaterhouseCoopers (PwC) has demonstrated that there is a clear UK north-south divide when it comes to coping with the effects of the economic downturn.

Its UK Economic Outlook showed that financial stress is a key concern for many households, but Wales, the north-east of England and the West Midlands are suffering the worst due to high unemployment, decreases in house prices and insolvency.

The report said that the causes of the higher financial stress levels in these areas were a mixture of high increases in unemployment and economic inactivity rates, marked falls in house prices, and increases in personal insolvencies.

However, London, the east of England and the south-east have all been less negatively affected by financial stress, despite relatively high levels of unemployment.

PwC said the pattern highlights a north-south divide that had been manifesting itself since before the recession.

"There will therefore be no early end to the financial pressures on households across the country, while our regional growth estimates suggest some further widening of the north-south divide next year," said chief economist John Hawksworth.

He added that businesses may need to tailor their strategies for individual regions if they are to continue to attract custom.

PwC also said that it expects UK GDP to rise by only one per cent in 2011 and 2012 (lower than the official government forecast), while consumer spending could shrink by 1.2 per cent by the end of this year.

Meanwhile, CPI inflation is likely to stay above the Bank of England's two per cent target "for some time", the report claimed.

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