Worse off and worsening

Since its inception in 2020, the Health, Wealth & Happiness Index – which underpins the Health, Wealth & Happiness Report – hasn’t ever made for optimistic reading. 

Through the pandemic, the nation’s health – and individuals’ happiness – took a battering. As restrictions drew to an end, happiness shot up but health plummeted again. 

It was like a game of whack-a-mole: bash one down and another pops up …

The only relative constant in the pandemic was wealth. Although the graphs shot up and down, the actual state of people’s wealth didn’t move too much - not really. In a sense the nation’s wealth was frozen where it was. And with government support, steady wages, protected jobs and fewer spending opportunities, many people’s perception of their financial position actually improved. 

But there was always a fear that wealth would thaw come the pandemic’s end and it has certainly done that. Few would’ve predicted an omni-crises in wealth that’d be this bad for this long …

Cost of Living – where are we at?

As you’ll read in the HWH Index write up, the Wealth Index recorded consecutive quarterly declines throughout 2022. 

In Q2 2022, the YouGov / Cebr Consumer Confidence Index reflected then-record lows in how UK households perceive their financial situation and in Q3 2022, the Wealth Index itself dropped to 75.2 - a new record low. 

But you don’t need fancy macro data to tell you the situation is bad. We all know it. What we can do, however, is add some trends, pounds-and-pence to see exactly where we stand. 

How bad is bad?

When asked how better or worse off people feel about their financial position now versus 12 months ago – when the cost-of-living crisis was only beginning to bite – one in three (33%) say they feel “a little worse off” and nearly one in five (19%) say the feel “a lot worse off.”

The net figure for “worse off” is 52% – over half the country – while the net figure for “better off” is only 15%, around one in seven. The remaining one in three Brits (33%) say they don’t feel any different. 

Women are considerably more likely than men to feel “worse off” (58% versus 46%) and it’s interesting that people feel more “worse off” the older they are. In the 18-34 age group, 41% feel “worse off”, rising to 56% in the 35-54 age group and peaking at 57% in the 55-and-over age group. 

It is interesting, too, that people with higher household income were more likely to say they are now better off compared to the previous year, thus painting a picture that the cost of living is not any longer having an equal (in relative terms) impact. This might, at first read, be obvious, but the 2022 Health, Wealth & Happiness Report, noted that households up and down the income brackets consistently reported a financial situation that was markedly worse than their ‘normal’. 

By region, it’s worth noting that Scots are most likely to feel “better off” and among the least likely to feel “worse off”, while residents in Northern Ireland feel “worse off” than anyone else by a considerable margin. 

Across England, roughly one in two people say they feel “worse off” (53%) and the Welsh are among the most likely to say they don’t feel any different. 

Also fascinating is that UK ethnic minorities are twice as likely to say they feel “better off” than white people (28% versus 14%) and it’s similarly curious that hybrid workers are the most likely of all three worker types – fully remote, hybrid and fully on-site – to say they feel “worse off”. 

How much worse off?

The prior question centres on a feeling. How much worse off do you feel. 

Best we add some facts to the feelings, then, and it’s interesting that while men and younger people are among the least likely to feel worse off, they’re the most likely – in pure pounds and pence – to actually be worse off. 

When asked how much you expect to be down per month in the next few months, the national average figure shook out at £233, but that figure comprises £264 per month for men and £200 per month for women. The 18-34s reckon they’ll be down over £366 per month which is much more than the £140 per month given by the 55-and-overs. 

A caveat here is that feeling worse off will be relative to a person’s starting financial position, income and overheads, yet it’s still fascinating to read that the youngest portion of the UK feel better about being worst off. The oldest portion of the UK feels worst about being much better off … in pure pounds and pence, anyway.

You also get a real sense of the London premium in this question. When asked to put a monetary amount on how much worse off they’ll be per month for the next few months, Scotland, Wales, Northern Ireland, the North East, The East, The South East and the West Midlands all give average figures south of £200 per month. 

In London? Well, Londoners reckon they’ll be a whopping £546 per month worse off … 

Again, this isn’t an apples and apples comparison as everything is relative and London salaries, expenses and expectations are different. Still, in pure cold numbers £546 is a shuddering amount of money. 

Financial footwork

In the next question, we asked respondents to list things they’ve done, whether by choice or by necessity, to shore up their financial health in the last 12 months.

The most common behaviours are keeping closer tabs on spending (37%), and dipping into savings (29%). In fact, we were able calculate that those people who have had to raid their savings have withdrawn an average of £292 each per month. 

Meanwhile, one in six (16%) people have drawn up a budget and over one in ten (11%) have delayed big purchases, such as a house or a car. 

Another one in ten (11%) have reviewed their home and motor insurance policies, while 8% have borrowed money from friends and family. Some 8% have turned to credit cards and short-term debt and 4% have taken on new long-term debt. One in 33 people (3%) has gambled more.

So far we’ve focused on forced or negative financial manoeuvrings, but there is some positive news in-the-mix too. Somehow, nearly one in four (23%) say they’ve managed to save money in the last 12 months; an average of £350 each per month in fact. 

Further, nearly one in ten (9%) say they’ve paid down debt and one in 25 (4%) people in the UK have even overpaid on their mortgage. 

Back to the gloom, though, and it’s more than a little worrying that 18-34s are the demographic most likely to have taken on more credit card debt (14%) and long-term debt (7%). They’re most likely to have borrowed from friends or family (13%), stepped up their gambling (5%) and they’re even most likely to have sought financial help from loansharks (2%).

Any rays of light?

As part of this year’s Health, Wealth & Happiness survey, we looked to find out the cost-cutting measures people have taken to in the last 12 months to buy financial wiggle-room. 

It gets quite creative so flick over for a short-sharp joy injection courtesy of the UK’s Thrifty ingenuity. 

For now, we can only end with a shade of optimism plucked from Cebr’s Wealth Index forecast. While Cebr anticipate a “mild” recession in the first half of 2023, they also predict that inflation will soften, wages will rise and the pressure on households’ budget should start to ease ever so slightly. This is barring any new, unforeseen events, obviously. 

It’s not pure optimism, but it’s the best we have to go on right now …