HWH Index 2023

The LifeSearch Health, Wealth and Happiness (HWH) Index monitors changes in UK sentiment and realities across the domains of health, wealth and happiness. Each channel is built of several datasets, proprietary and public domain, and culminates in a score. The scores from three indices are rationalised in the headline HWH Index. 

HWH Index readings stretch as far back as 2011 to enable historic comparison and to view how seismic recent events – namely the pandemic, war in Ukraine and the cost-of-living crisis – have impacted, and continue to impact, the people who make the country.

It’s a little different this time around in that 2022 / 23 refers not to a calendar year but the 12-month period between April 2022 and March 2023, when work on Health, Wealth & Happiness 2023 began in earnest. 

The HWH Index 2022 / 23

Diving straight in, the news isn’t great. All three domains – health, wealth and happiness – worsened through 2022 / 23, chiefly due to the cost-of-living crisis and subsequent falls in living standards.  

The combined Health, Wealth & Happiness Index averaged 77.6 for the year, considerably down from 87.0 in 2021 / 22. Although 2023 has brought flickers of optimism in the Wealth and Happiness domains, the current score of 75.5 for Q1 2023 remains firmly down on historic averages.

A quick summary of the Health Index and 2022 / 23 saw continuing declines, quarter after quarter. Although the Health Index is not any longer stuck in the low-lows of the pandemic period, its values are still way down on pre-pandemic times, indicating Covid’s lingering adverse health effects on the system, and in the population.

The Wealth Index entered 2022/23 already on a downward trajectory. Although things looked strong in late 2021, as Covid restrictions eased and the economy opened up, the Wealth Index nosedived from a peak of 97.0, and remained suppressed throughout the rest of 2022. 

Russia’s invasion of Ukraine and its far-reaching economic repercussions drove the Wealth Index down from Q2, culminating in a near-record low in Q3. Although a small recovery has recently appeared – in Q1 2023 the Wealth Index stood at 80.8 – it’s very delicately balanced.

The Happiness Index was volatile over 2022 / 23. Notes of optimism in early 2022 soon fell sharply as inflation, high prices and economic uncertainty impacted households up and down the country.

In Q3 the Queen’s death triggered another dip and by year’s end the Happiness Index hit a record low of 76.0. 

In Q1 2023 we saw a small uptick from that record low but the lingering economic threats will likely limit any significant upswings in Happiness or, indeed, Health and Wealth. 

The Health Index 2022 / 23

Although Health Index values remain considerably stronger than the lows of the pandemic, they’re still well short of pre-pandemic values. 

The Health Index – which chiefly comprises seasonally adjusted death rates, long-term adverse health trends and worker sick leave data – entered 2022 on an upswing but suffered a fall of 3.8 points in Q2, due to an increase in seasonally adjusted deaths, and the share of the population reporting long-term health problems. 

Seasonally adjusted deaths accounted for a further decline in Q3 2022. In fact, Cebr estimates that there were 152,000 deaths during Q3 2022 - the highest value since Q1 2021 when the Alpha variant of Covid-19 prompted the reimplementation of lockdown measures. 

Analysis from the Office for Health Improvement and Disparities attributes 2022’s high death rate to cardiovascular problems, and to extreme summer heat which saw temperatures rise to record-highs of over 40°C.  

Into Q4 2022 and a biting flu season contributed to further declines in the Health Index, as did more instances of long-term health problems, some of which may be attributable to long Covid. In

December 2022, an estimated two million people – that’s 3.1% of the UK population – self-reported that they’re living with long Covid symptoms. 

The Health Index averaged 73.4 across 2022 / 23, down on 2021/22’s value of 82.5 but up on the 68.0 low of 2020 / 21. As it stands in early-mid 2023, the Health Index remains firmly below historic averages as lingering pandemic effects, among other factors, continue to grind. 

The Wealth Index 2022 / 23

The Wealth Index is comprised of several economic and emotional indicators, from house prices to share indices to citizens’ perceptions of their own finances. 

And it actually entered the year 2022 on a small note of optimism. 

Wealth was almost frozen-in-time during the pandemic as a result of conserved wages (including furlough), buoyant asset (property) prices and fewer spending opportunities. So by late 2021 and the final throes of the pandemic, UK households were in a relatively strong position. Needless to say that didn’t last. 

Following Russia’s invasion of Ukraine, and its subsequent impacts in multiple economic spheres, inflation has soared, wages have lost power and energy prices hit all-time-highs.

Hence the Wealth Index recorded consecutive quarterly declines through 2022 and, in Q2, the YouGov/Cebr Consumer Confidence Index reflected then-record lows in how UK households perceive their financial situation.

In Q3 2022, the Wealth Index dropped to just 75.2, marking a new record low; further south than the value recorded in Q3 2020, and the initial arrival of the pandemic. 

Later in 2022, households’ perception of their future financial positions also hit a record low. Present-day upheaval is one thing, but this was households reporting wariness over their finances for the months and years to come. From there, only a bullish labour market and continued house price growth could save the Wealth Index from falling further. 

In more recent days small improvements have hit the Wealth Index and the magic number was 77.9 at the turn of 2022 / 23. Although inflation continues to bite at 40-year-high levels, stock market growth and continued labour market stability have boosted households’ perceptions of wealth and this prompted Wealth Index growth to 80.8 in Q1 2023. 

Yes, that’s two consecutive quarters of improvement but it should be noted that the Wealth Index remains firmly down on an annual basis and well below historic averages.

Cebr expects a mild recession in the first half of 2023 and thus weak values to continue weighing down the Wealth Index. That said, pressures are expected to subside and prevent the Wealth Index sliding back to 2022 / 23 levels which, incidentally, haven’t been so low since 2012 / 13 and the depths of the global economic crisis. 

The Happiness Index 2022 / 23

The Happiness Index is primarily infused with two indicators: Perceptions of personal wellbeing, which covers levels of life satisfaction, happiness, anxiety, and worthwhileness. And prevalence of feelings amongst the adult population, which charts people’s feelings of sadness, frustration, optimism, and loneliness.

The first thing to say is that the Happiness Index started strongly in season 2022 / 23. By Q2 2022, the Index stood at 87.4, which was up 7.4 points on the previous quarter and the highest value in a year. With Covid restrictions ending, national happiness – as measured by YouGov and the ONS – took a turn to the good. We also became less anxious during this time, and feelings of sadness and frustration eased. 

The momentum didn’t last long, however. Any gains in national happiness in Q2 2022 were nixed in Q3 2022 as the Happiness Index fell to 79.1 - an 8.3-point slump and the largest quarterly drop since the very beginning of the pandemic. During this quarter, YouGov’s indicator showed that an average of just 43.7% of the population reported feelings of happiness in any given week, down from 46.9% in Q2.

High-level economic factors and the cost-of-living crisis, not to mention global events, likely contributed to the Q3 slump, which continued in Q4 for a record low of 76.0.

During this time YouGov’s happiness indicator fell to levels not seen since the early pandemic. Feelings of frustration also peaked as Brits’ levels of hope and optimism – in the present and for the future – plummeted in parallel with the 40-year-high inflation recorded in Q4. 

A return to improvement came in Q1 2023, with the Index ticking up by 2.6 points to reach 78.6, but as encouraging as this is, Q1 2023 still shows the fourth weakest reading in the history of the Index. 

Nonetheless, a positive turn is a positive turn. There’s new traction in households’ perception of their happiness and life satisfaction, with hope and optimism on the rebound. This is likely a response to inflation slowing and a slightly more promising economic outlook. 

Still, across 2022 / 23 as whole the Happiness Index averaged 80.3 and this marks the weakest annual score in the Index’s history.

If the cost-of-living crisis is indeed the main driver of households’ emotional perceptions, we would expect marginal improvement to take place across 2023 / 24 provided we can steer clear of any more unforeseen events – at a national or global level – that may derail the trajectory.

Threats to Health, Wealth & Happiness

• Near term is less than three months
• Medium term is between three and 12 months
• Long term is more than 12 months

What: Inflationary Pressure
Affecting: Wealth and Happiness
Likelihood: High
Timescale: Near-to-medium term

As measured by the Consumer Price Index (CPI), UK inflation hit multidecade highs in 2022, peaking at 11.1% in October. 

Since then, inflation has decelerated slightly, though it remains well above historic averages. With wage growth also falling behind, households’ real spending power has weakened. This is adversely impacting the Wealth Index, primarily through the channel of households’ perceptions of their finances and Cebr expects inflation to remain well above target for the rest of the year.

The strain on household finances hit hard in the Happiness Index in 2022 / 23, and this is expected to continue in the coming year; albeit at a less severe level. 

What: Recession
Affecting: Wealth and Happiness
Likelihood: Medium
Timescale: Near-to-medium term

Cebr expects the UK economy to experience a mild recession in the first half of 2023. A key factor in this is the anticipated slowdown in consumer activity: weak spending power and elevated price growth. 

While the recession is only expected to last for two quarters, it will likely hurt perceptions of the strength of the economy. This plus an associated spike in the unemployment rate will likely feed down to ordinary UK households.

Collectively, these factors represent sources of downward pressure on both the Wealth and Happiness Indices. 

What: Heightened interest rates
Affecting: Wealth
Likelihood: High
Timescale: Near-to-medium term

In response to ongoing inflationary pressure in the last 12 months, the Bank of England raised interest rates on numerous occasions. This has taken the base rate to 4.25%, which is well above the 0.1% rate seen as recently as December 2021. 

Though this elevated interest rate environment could support the Wealth Index by encouraging people’s savings, elevated interest rates typically slows asset price growth - and this is particularly true in the case of property. 

Higher interest rates can reduce demand for new loans and make existing debt more expensive. As a result, Cebr expects the coming year will bring at best a slowdown in house price growth and at worst a house price contraction.

What: Wage growth
Affecting: Wealth
Likelihood: High
Timescale: Medium term

By historic standards wage growth is currently quite high, even if it’s falling short of inflation.

With that, Cebr expects a return to real wage growth later this year and, as a result, household living standards are expected to turn a corner. This may bring renewed confidence and encourage more consumer spending for a general economic boost. 

All things being equal, this factor should see positive momentum return to the Wealth Index. 

What: Remote / hybrid working
Affecting: Health and Happiness
Likelihood: Medium
Timescale: Long term

Three years out from the start of the pandemic, many of the operational changes enforced on businesses have remained, whether partially or fully. 

Perhaps the most evident is hybrid working, which allows workers much more geographical flexibility and – according to studies – leads to a multitude of benefits in worker happiness and wellbeing. 

It now seems clear that flexible and hybrid working are here to stay and, as such, the aforementioned benefits could and should register in UK happiness.