The north-south divide in Britain is now at its worst since the beginning of the recession as households in the north-east and Yorkshire are among the hardest hit by skyrocketing unemployment and falling house prices, according to reports.

According to PricewaterhouseCoopers’ regional household financial stress index, stagnant wage growth, rising taxes, public sector cuts and personal insolvencies are piling the pressure on consumers who are finding it increasingly difficult to keep their heads above water.

"Our research also highlights how different London's experience of the recession has been from the rest of the economy. London performs worse than many other regions on measures such as unemployment rates, but our index demonstrates that the impact of the recession on household financial stress has been less in London than in other regions," said John Hawksworth, chief economist at PwC.

According to the report, the north-east and Wales suffered the greatest increase in financial stress since the beginning of the recession in 2008, followed by the West Midlands.

Londoners experienced the strongest earnings growth, the steadiest house prices and one of the lowest increases in personal insolvencies.

The south-east and east Midlands are expected to grow the most strongly this year while London is set to perk up as business and financial sectors gradually gain momentum.

But the report warned: "The north-east will continue to suffer some of the worst effects of the spending cuts."

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