Scots pair set the pace on income growth

Public-sector investment pushed Dundee in Scotland to post the fastest increase in gross disposable incomes of any UK city in the past five years.

However, accountants at UHY Hacker Young have warned that the Coalition's slashing of the public-sector workforce will hit growth in Dundee and other areas that have experienced a relative boom in recent years.

With 35.8 per cent of its population employed in the public sector, Dundee is set to face problems because of the Government's austerity policies.

Marc Waterman, partner at UHY Hacker Young, said: "Several UK towns particularly benefited from increasing public-sector investment in the years leading up to the financial crisis. However, these same towns will be hardest hit by the austerity measures."

Average disposable income in Dundee grew by 18 per cent between 1 January 2006 and 31 December 2010, from £12,649 to £14,925. Second-placed Aberdeen experienced 16.1 per cent growth, from £15,308 to £17,777. That was on the back of the rising price of oil, which is set to see the city's average disposable income climb even higher.

"Aberdeen is the boom town that has become a powerhouse driving the Scottish economy. It has been completely transformed since the 1990s," said Mr Waterman. "There is an enormous amount of wealth in the city now. "

The austerity measures and public service cutbacks will be less felt in the city, with only 19.9 per cent of Aberdeen's population employed in the public sector, less than the national average of 23 per cent. The other cities in the top five were Black pool, Birkenhead and Plymouth, which all boasted disposable income growth far higher than the national average of 12 per cent.

Bottom was Cardiff, with growth of 3.6 per cent.London had the highest average disposable income at £20,238.