Families' spending power is growing almost twice as fast in the North-East as in London as the economy recovers, a report has found.
Across the UK, households had around £7 a week more in discretionary income in March than they did a year ago to spend on ''luxuries'' such as holidays, sports, cinema tickets, dining out and savings as living costs continue to ease back and the employment situation improves, according to Asda's latest income tracker.
This 4.3 per cent annual jump in spending power is the most rapid rate of annual growth seen since autumn 2012, and it means that across the country families had around £170 a week to pay for non-essentials last month, once taxes and regular bills such as food and household bills were taken into account.
All regions have seen an annual growth in their spending power, but the report said that ''spiralling'' living costs in London mean the increase it is seeing lags behind the rest of the UK by comparison.
Household spending power in the North-East has grown by 5.5 per cent annually to the first quarter of this year, while in London it has edged up by just 2.8 per cent year-on-year.
The gap between the level of discretionary incomes in London and those in the rest of the UK has narrowed slightly, from nearly 37 per cent a year ago to just under 36 per cent.
The report said the South East is seeing the most rapid increase in families' discretionary spending power, which has lifted by 5.7 per cent year-on-year to reach £183 a week on average amid a ''significant'' strengthening of the jobs market there.
In the North-East, household spending power has now reached around £115 a week and in Yorkshire and the Humber spending power has grown 3.6 per cent to £149 a week.
The report said growth in the region is being boosted by its relatively high reliance on the manufacturing and construction sectors, which are both seeing relatively rapid pay increases.
But despite the pick-up, the average discretionary income in the North-East is still half of that of London households, where it now stands at around £231 a week.
The report said that as well as high living costs, discretionary income growth in London is more ''subdued'' due to a strong dependence on the financial and business services sector, which continues to see declines in pay.
Average discretionary incomes in Northern Ireland are also starting to catch up with those for the UK as a whole, according to the report, which is compiled for Asda by the Centre for Economics and Business Research (Cebr).
Families' spending power in Northern Ireland has grown by 4.8% annually to around £80 a week. The report said this has been helped by the fact that like the North East, Northern Ireland has a strong reliance on manufacturing and construction.
In Wales, discretionary incomes have grown by 4.1 per cent year-on-year to reach £149 a week typically.
In Scotland, household spending power has grown by 3.2 per cent over the last year to reach around £177 a week, which has been helped by falling unemployment there, the report said.
Andy Clarke, president and CEO of Asda, said he was ''delighted'' to see that regions like the North East and Northern Ireland are finally seeing a stronger step towards recovery.
He said: ''There now appears to be a real momentum behind the economic recovery.''
The report is based on a combination of official statistics and Cebr's own calculations. It pointed to the recent slowing in the Consumer Prices Index (CPI) rate of inflation to a four-year low of 1.6% in March as evidence of the pressure on households easing.
It also said that falling unemployment has helped to boost household finances with more than 30 million people now in work, which is 691,000 more than last year.
The report said the cost of petrol and diesel has dropped by 6.6 per cent on a year ago, helping to bring down inflation, while mortgage interest payments are also being kept down by low interest rates.
Rob Harbron, senior economist at Cebr, said: ''Robust economic growth is expected to continue, which means it is likely that discretionary incomes will continue to rise over the coming months.''
Here are the annual increases in household spending power across the UK and the average amount of discretionary income families had to spend each week in the first quarter of 2014:
- London, 2.8%, £231
- North West, 3.0%, £150
- Scotland, 3.2%, £177
- South West, 3.2%, £154
- Yorkshire and the Humber, 3.6%, £149
- Wales, 4.1%, £149
- West Midlands, 4.3%, £144
- East Midlands, 4.8%, £150
- Northern Ireland, 4.8%, £80
- East, 5.4%, £192
- North-East, 5.5%, £115
- South East, 5.7%, £183