The UK's disposable wealth has continued to grow despite a slow-down in consumer spending, suggesting that smarter marketing is needed if UK businesses are to benefit from increasing consumer wealth, according to an analysis of UK disposable wealth by marketing database provider KDB.
The company's quarterly analysis of UK disposable wealth revealed that the average UK household has access to some 40,000 in releasable assets (figures refer to September 2005).
Moreover, the figures show a clear North-South divide in terms of absolute realisable assets, with the North now starting at the Midlands. Growth in disposable wealth, however, is found more in the North of England, Scotland and Wales than in the South of England.
| Region | Sept 2004 | June 2005 | Sept 2005 |
| London | 77,015 | 79,889 | 82,267 |
| South East | 57,142 | 59,107 | 60,317 |
| South West | 56,048 | 59,151 | 59,309 |
| East Anglia | 44,514 | 46,969 | 47,961 |
| North East | 27,595 | 28,768 | 29,785 |
| Midlands | 27,126 | 28,373 | 28,981 |
| North West | 22,171 | 23,358 | 24,375 |
| Wales | 22,142 | 23,514 | 24,247 |
| Scotland | 20,517 | 22,096 | 22,997 |
| UK average: | 35,824 | 37,730 | 38,909 |
Source: KDB
Disposable wealth
The KDB analysis defined "disposable wealth" as assets which are truly liquid, and upon which consumers could actually call for spending if required. There are three key types of asset that make up this model:
- Household equity that can genuinely be released;
- Stocks and shares that are not part of a formal pension plan;
- Cash savings.
According to Matt Boot, chief analyst for KDB, "For the UK as a whole, the average disposable wealth per household is currently almost 39,000 - a sum that has grown by 9% year-on-year, and 3% quarter-on-quarter."
Bouncing back?
Despite slow growth in the housing market over the past year (put by some organisations at only 2% - 3%) stocks and shares have seen a robust recovery. The London Stock Exchange's market capitalisation has risen by more than 23% over the last year, putting more instant access cash reserves at the consumer's disposal.
Shane Baylis, chief executive for KDB, added: "Consumer spending growth levels and disposable wealth growth levels should not be confused. This quarter's analysis shows that disposable wealth has continued to grow in most parts of the UK."
However, Baylis warns that consumers may not be choosing to spend their wealth readily, and the marketing element may be the key to creating spending confidence: "In this atmosphere, it is important for British business to understand trends in the nation's disposable wealth. If it is in decline, this would provide a very strong forward indicator of recession. If growth in disposable assets is still happening, then UK plc needs to use its marketing skills to persuade the consumer to open their wallet."
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