Aberdeen has UK’s biggest increase in disposable income since the credit crunch

Publications that covered this story include The Independent, 14 April, BBC News, 14 April and Daily Telegraph, 14 April.

  • Aberdeen households now better off by 19% compared to before the recession
  • London ranks a lowly 7th place

Aberdeen residents have seen the biggest increase in their disposable income of any major town or city in the UK, according to our research.

Aberdeen’s households are now on average £2,285 better off than before the recession, following a 19% increase in disposable household income over the last five years from £15,143 to £17,986*.

The average household disposable income for the UK’s Top 40 towns and cities has risen by just £1,761 over the same period to £14,068. The rise in disposable household income has largely been driven by substantial reduction in mortgage costs as a result of the Bank of England’s interest rate policy.

We looked at the growth in average household disposable income – the money a household has left to spend or save after taxes and mortgages or rents – in the UK’s Top 40 towns and cities (by population size).

Colin Wright, Partner, comments: “Households in Aberdeen have benefitted from both the collapse in the UK’s mortgage costs and, uniquely, from the oil boom. As one of the few global centres of the oil & gas industry Aberdeen has boomed in recent years.”

“It can be hard to imagine but Aberdeen is now part of that small group of international oil cities that have had a relatively good recession like Houston, Bahrain and Almaty.”

Colin explains that as real wages have stagnated few people feel better off but that the historically low interest rates have bailed out the finances of many households.

Top five towns and cities

The other top five towns and cities enjoying the biggest increases in average household disposable incomes were:

  1. Brighton, £2,463 increase from £14,869 to £17,332 over five years
  2. Belfast, £2,347 increase from £12,757 to £15,104 over five years
  3. Gillingham and Medway towns, £2,288 increase from £13,168 to £15,456 over five years
  4. Blackpool, £2,188 increase from £10,629 to £12,817 over five years

Aberdeen’s oil wealth drives increase of disposable income

We explain that Aberdeen households’ disposable wealth has grown so rapidly because of the strength of the oil industry. As a global hub for the oil industry, Aberdeen is home to many major exploration and support businesses, such as the energy services giant the Wood Group.

We point out that between 2006 and 2011 Aberdeen had one of the highest rates of economic growth in the UK. As well as oil exploration, the city has a growing industry onshore energy industry including the development of wind farms.

Aberdeen first transformed itself to a booming economy based on North Sea oil in the 1970s. It has seen a second boom since 2001 as oil prices have shot up and the US workers of the 1970s have now been replaced by local experts and home grown companies producing innovative technologies.

Colin adds: “Oil prices rose during the recession and by 2012 oil prices averaged above $111 a barrel.”

“Aberdeen’s household disposable income has increased largely because of the success of its thriving oil sector. It has been the main driver of wealth for the city and region. It is no coincidence that Aberdeenshire has the highest sales of 4x4s in the UK and a higher rate of multibillionaires per head than even London.”

Brighton in second place, London ranks just seventh

We explain that Brighton’s second place in terms of growth in household income is due to the fact that the seaside resort has become a magnet for media and high tech entrepreneurs benefitting from the explosion in app development market, who may prefer ‘London-by-the-sea’ for its better lifestyle and lower housing and other costs compared to the capital city.

By contrast, London achieved only 7th place on the disposable household income table. While London continues to be an engine for wealth creation, the reduction in City bonuses and jobs, as well as the boom in house prices driven by foreign investors, (GDHI is after mortgage and rent) during the last few years have impacted on Londoners’ disposable incomes.

Colin says: “London is a dynamic economy that will continue to create jobs and attract new investment. But the success of the property market, along with City job losses and new restraints in bonuses has meant that London has dropped in the disposable income league.”

“These figures are a dramatic illustration of the need for the Government to address the lack of housing stock in London, as there is a real risk that well qualified and talented individuals will seek opportunities outside the UK where they might enjoy a better standard of living.”

Bottom five towns and cities with the smallest additional growth

The five towns and cities with the smallest additions in disposable household income were:

  • Hull, £1,418 increase from £9,689 to £11,287
  • Bristol, £1,335 increase from £12,730 to £14,065
  • Leeds, £1,172 increase from £12,297 to £13,469
  • Bradford, £1,151 increase from £11,216 to £12,367
  • Nottingham, £1,070 increase from £9,764 to £10,834

Colin comments: “These figures show that these areas are continuing to struggle with the after-effects of the recession. Businesses in these cities and towns need private and public sector investment to help them catch up.”

Top UK towns and cities increase in Gross Disposable Household Income

 

Towns and cities by increase in GDHI

 

Average GDHI (£)

Year-end January 1 2007

 

Average GDHI (£)

Year-end  January 1 2012

 

£ Increase in average GDHI

1.Aberdeen

15,143

17,968

2,825

2. Brighton

14,869

17,332

2,463

3. Belfast

12,757

15,104

2,347

4. Gillingham and Medway towns

13,168

15,456

2,288

5. Blackpool

10,629

12,817

2,188

6. Plymouth

11,503

13,682

2,179

7. London

13,934

16,034

2,100

8. Warrington

13,366

15,421

2,055

9. Bournemouth

14,798

16,834

2,036

10. Southend-on-Sea

14,321

16,347

2,026

11. Liverpool

11,191

13,155

1,964

12. Coventry

10,827

12,751

1,924

13. Stoke-on-Trent

10,618

12,474

1,856

14. Swansea

12,053

13,882

1,829

15. Bedford

15,121

16,899

1,778

16. Dudley

10,846

12,612

1,766

Average of top 40 towns and cities

 

12,307

 

14,068

 

1,761

17. Walsall

10,841

12,598

1,757

18. Sunderland

10,914

12,667

1,753

19. Peterborough

12,940

14,683

1,743

20. Wolverhampton

10,797

12,518

1,752

21. Glasgow

11,807

13,528

1,752

22. Solihull

15,661

17,359

1,698

23. Portsmouth

10,600

12,294

1,694

24. Cardiff

13,079

14,740

1,661

25. Barnsley

11,802

13,447

1,645

26. Leicester

10,250

11,855

1,605

27. Birmingham

10,987

12,566

1,579

28. Manchester

12,200

13,779

1,579

29. Southampton

11,049

12,597

1,548

30. Edinburgh

15,781

17,323

1,542

31. Wakefield

12,336

13,864

1,528

32. Swindon

14,423

15,931

1,508

33. Middlesbrough

11,126

12,605

1,479

34. Newcastle

11,580

13,052

1,472

35. York              

13,084

14,507

1,423

36. Hull

9,869

11,287

1,418

37. Bristol

12,730

14,065

1,335

38. Leeds

12,297

13,469

1,172

39. Bradford

11,216

12,367

1,151

40. Nottingham 

9,764

10,834

1,070

**Five years to 1 January 2012 – the most recent data available

Top five UK towns and cities increase in Gross Disposable Household Income

Towns by increase in GDHI Average GDHI (£)
Year-end January 1 2007
Average GDHI (£)
Year-end January 1 2012
£ Increase in average GDHI
Aberdeen

15,143

17,968

2,825

Brighton

14,869

17,332

2,463

Belfast

12,757

15,104

2,347

Medway

13,168

15,456

2,288

Blackpool

10,629

12,817

2,188

Bottom five UK towns and cities increase in Gross Disposable Household

Towns by increase in GDHI Average GDHI (£)
Year-end Jnauray 1 2007
Average GDHI (£)
Year-end January 1 2012
£ Increase in average GDHI
Hull

9,869

11,287

1,418

Bristol

12,730

14,065

1,335

Leeds

12,297

13,469

1,172

Bradford

11,216

12,367

1,151

Nottingham

9,764

10,834

1,070

**Five years to 1 January 2012 – the most recent data available