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Spending gulf between north & south set to rise


Consumer spending in London is set to rise annually by 2.5 per cent this year compared to a two per cent fall in the north-east of England, a new report has found.

Retail sales volumes are set to rise by just one per cent in 2011, largely due to inflation, and national disposable household income is set to decline 1.5 per cent year-on-year to an average £14,649.

These warning come from consumer research company Kelkoo, which also estimates that only the south and east midlands areas of the UK will see over one per cent of spending growth this year.

Chris Simpson, Marketing Director of Kelkoo, commented: “Retailers certainly have their work cut out this year as disposable incomes are hit by austerity measures and consumers tighten their belts to weather the storm.

“The ever increasing cost of living is hitting the entire country with varying degrees of severity, alongside rising unemployment and increasing numbers of vacant shop units.”

Disparities between different areas of the UK in Kelkoo’s research are striking, with the average disposable income in London 54 per cent higher than in the north-east of England, and shoppers in the capital set to spend 60 per cent more than consumers from the latter area.

The north-east is also set to have the worst unemployment in 2011 of 10.7 per cent, up 1.3 per cent year-on-year, followed by Yorkshire and the Humber with 10.3 per cent and Wales with 10.2 per cent.

A horizontal split in terms of employment is made clear by looking at the projected jobless figures for the south-east and south-west for 2011, 6.5 per cent and 6.6 per cent respectively.

Today’s reported 0.4 per cent fall in like-for-like retail sales during February shows the struggle across the country for retailers to encourage consumer spending and Simpson predicts that this will remain the case throughout the year.

“In 2011, we forecast total retail spending will be worth £296.1 billion, representing an increase of 1.96 per cent on last year,” Simpson added.

“While the headline figure looks attractive, and consumer spending is expected to rise marginally by one per cent, this growth is in fact driven entirely by inflation, and retail volumes are actually expected to contract in 2011. So, in other words, we will need to spend more to buy less.”

Published on Tuesday 08 March by Editorial Assistant

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