10 October 2011

Publications that covered this article include The Financial Times, The Daily Telegraph and The Independent, 10 October 2011.

• Aberdeen beats London to first place

Aberdeen and other major Scottish cities have seen the fastest rise in gross disposable incomes over the last five years, reveals our research.

The research, which looks at the Top 50 UK towns and cities, shows that three of the top five locations with the highest increase in gross disposable household income are in Scotland. (See table below for the UK’s Top 50 towns and cities – based on National Statistics data).

Our research explains that Aberdeen beat London to first place, becoming the city with the highest increase in ‘Gross Disposable Household Income’ (GDHI) over the last five years.[1]

Disposable household income jumped 24.7% in Aberdeen from £13,669 in 2004 to £17,039 as of Dec 31 2009 (latest stats available). London came second with a 22% rise from £16,096 in 2004 to £19,658 in 2009.

Over the same period, Glasgow (4^th) and Dundee (5^th) saw their GDHI increase by 20.6% to £13,571 and 14,316 respectively in 2009.

It was found that household incomes in Aberdeen were boosted by a booming oil industry.

As the oil capital of Europe, Aberdeen has enjoyed the benefits of rising oil prices, which has seen increased investment in the North Sea. Aberdeen is also the headquarters of some of the world’s leading oil & gas service companies – who benefit from increased exploration work across the world rather than just in the North Sea.

Scotland’s performance was also helped by the fact that it has suffered a much smaller fall in householder employment rates in this period than the rest of the UK.

Although pay increases over the last five years, across the UK, have been relatively modest disposable income has been boosted by a fall in the mortgage payments as the Bank of England of slashed the base rate to 0.5%.

Marc Waterman, partner at our London office, comments: “London has been seen as streets ahead of the all other UK towns and cities for growth in disposable household income, but these figures show that the gap is closing.”

“Although London still has the greatest disposable income in the UK, Aberdeen is catching up fast.”

Marc explains: “As the center of the UK’s oil & gas industry, Aberdeen benefitted from persistently high oil prices. Despite the recent North Sea tax increases, there has been continued investment in North Sea oil & gas production.”

“If oil prices remain at their current rate of over $90 a barrel, this momentum is likely to continue.”

“Although disposable incomes in Dundee and Glasgow have grown from a low base, the growth has been very rapid, aided by their low housing costs and the fact that they avoided the worst of a spike in unemployment.”

“However, with more public sector budget cuts on the way growth in disposable income may moderate or reverse for some towns that are heavily dependent on public sector employment.”

Top 50 towns and cities by the highest increase in gross disposable household income (GDHI) over the last five years

[1] ‘Gross disposable household income’ is the amount of money that individuals have available to spend after expenditure associated with income, like taxes, property costs, pension payments and social contributions. Based on National Statistics data

Marc Waterman