From my office in Mayfair it would seem that economic recovery is gathering pace, but when I visit clients outside the M25 it is a very different picture.

A year-end editorial in the Observer highlighted the imbalance between London and the rest of the country, calling for efforts to redress the balance of wealth distribution across the regions.

In my last blog about the winners and losers over Christmas I cited examples to show the patchy nature of recovery.

However some research highlights the issue on imbalance:

The Trussell Trust, organiser of the food bank network, reports a 400% increase in demand for emergency food parcels in 2011-12 (most recent figures). More alarming is that the recipients are “ordinary families, who in the past would never have had to fall back on such support”.

These include recipients among the “squeezed middle” who according to the Resolution Foundation make up a third of the country’s working age households – people on an income of between £20,000 and £35,000, 60% of them owner-occupiers. These households spend 48% of their household income on essentials (food, clothing, transport, energy supplies) and 25% of their income on mortgage payments. 

This is no surprise given that energy prices have risen by 24% since August 2009, not including the most recently announced increases averaging around 7%, and that house prices have risen by 7.5% in the last year, according to the Halifax, while wage increases have at best only risen by around 2%, if at all.

The Foundation predicts that: “Based on current projections, the typical low to middle income household is expected to be no better off by 2017-18 than it was in 1997-98”.

Not all of those in the squeezed middle can get on the train in order to exploit the opportunities available in London – especially not when the cost of a season ticket is around £3,236 from Southend, £6,760 from Grantham, £5,440 from Rugby and £7,480 from Norwich.

All of this underlines the lunacy of relying for recovery on a growth in consumer spending and property sales – and why many SMEs outside London are somewhat sceptical that there is economic recovery at all.

Share article