Londoners earn the most but spend very little, IFS finds

Friday 11 April 2025 11:23 am

Londoners prime the rating for revenue per head throughout the UK but spend little or no after housing prices are taken under consideration, in keeping with analysis by main assume tanks. 

A brand new report by the Institute for Fiscal Research (IFS) and Financial Statistics Centre of Excellence (ESCoE) indicators that top housing prices within the capital metropolis are placing folks’s budgets underneath intense pressure. 

Londoners’ earnings stand at round 39 per cent greater than the nationwide common however family consumption, after housing prices are taken under consideration, is close to the underside of the nationwide distribution.

Revenue ranges and spending habits by north Londoners are key to the findings. 

Researchers stated that households in areas together with Islington and Camden rank decrease in consumption after housing prices regardless of putting excessive within the nationwide distribution for revenue per head. 

Households within the Metropolis of London and Richmond rank very extremely in each the revenue per head and consumption distributions, reflecting how largely spending habits diverge inside London. 

Home costs in London are considerably larger than that of the remainder of the UK, in keeping with the most recent Halifax Home Worth Index launched earlier this week.

The everyday worth for a home in March was just below £300,000 whereas London costs stand at round £550,000. 

Researchers on the IFS and the ESCoE urged that many individuals select to dwell in London whereas earnings are excessive, permitting them to save lots of earlier than they transfer out of the town at a later stage of their lives. 

Variations within the costs of products and providers throughout London boroughs weren’t taken under consideration by researchers. 

Revenue per particular person was additionally extra unequally distributed throughout completely different areas than family consumption, the report confirmed. 

Gautam Vyas, who co-authored the analysis which takes knowledge from 2018 and 2019, stated the findings had been a measure for the distinction in dwelling requirements throughout the nation. 

“Our findings problem the standard knowledge that the standard London family enjoys larger dwelling requirements than their counterparts throughout the nation,” he stated. 

“Reasonably, evidently a mixture of upper housing prices and variations in saving behaviour implies that top incomes don’t translate into larger consumption spending for Londoners.”