LifeSearch have worked with the Centre for Economic and Business Research (Cebr) on the Health, Wealth & Happiness Index since 2020.
It was initially compiled to chart the nation’s sentiment and reality across these three domains during the Covid-19 pandemic. We perhaps didn’t envision that such wild swings would continue in its aftermath.
But sure enough, as we continue to wade in uncharted waters, we see fluctuating lines in UK health, wealth and happiness as clear as day, with the prospect of more worrying times to come.
The Index Q2-Q3 2022
The Q2-Q3 update brings us up to the present day and, once again, volatility is the watch-word. The HWH Index fell in both quarters, sinking to 79.0 in Q3; its lowest level since Q1 2021 and the aftermath of the first Covid Christmas.
While the Health and Wealth indices fell in parallel with the headline Index, we saw an improvement in Happiness in Q2, before it too slumped in Q3.
The main driver of the overall downfall is the cost-of-living crisis whose impact is particularly evident in the Wealth and Happiness indices.
The Health Index
The Health Index fell by 3.8 points in Q2, sinking to 81.2 from 85.0 in Q1.
The drop was primarily due to an increased number of deaths (139,000 by Cebr estimates). Although that figure is well down on the number of deaths registered through the pandemic, it’s still significantly higher than pre-pandemic figures.
Into Q3 and the Health Index fell further to 75.9, the weakest value since the end of 2021. This again was driven by a high number of seasonally adjusted deaths which, according to analysis from the Office for Health Improvement and Disparities, were significantly driven by cardiovascular problems and extreme heat over the summer.
Other data which informs the Health Index, such as the levels of employee sick leave / absenteeism and long-term health issues, have remained broadly consistent with the recent past.
The Wealth Index
During the pandemic the nation’s wealth was, in many respects, frozen in time as a result of Covid relief measures and a lack of spending opportunities. The prediction was always that we’d see the fuller impact of the pandemic on people’s wealth once Covid support ended and the economy tried to recalibrate.
With that, and the multitude of other, global factors, the Wealth Index is in decline and registered just 83.3 in Q2 2022 - its weakest reading since Q4 2020. By Q3 it slumped further to 82.1.
The drops through spring and summer 2022 are largely down to the fallout following Russia’s invasion of Ukraine and the rising prices (energy, goods and inflationary pressure) in its wake. Wage growth has lagged behind inflation by 2.5% annually, according to ONS estimates, making this the largest contraction since the 2007/8 financial crisis.
As the year has progressed, consumer confidence has dwindled and, in Q2 this year, the YouGov/Cebr Consumer Confidence Index (which measures households’ perceptions of their finances) reached record lows.
Although a resilient labour market has prevented the Wealth Index from slipping further, inflation is set to peak in Q4 this year and we can expect more pressure on wages and household finances ahead of another anticipated drop in the Wealth Index.
The Happiness Index
The Happiness Index improved by 7.4 points in Q2, reaching 87.4. This marks the highest level since Q2 2021’s 87.8, when restrictions began to ease after the end of the third national lockdown.
During Q2, data showed that Brits’ sense of life satisfaction and happiness increased, while anxiety levels dropped off. But the optimism of Q2 didn’t last and Happiness in Q3 saw a sharp fall to 79.1 - the largest quarter-to-quarter drop since Q2, 2020 and the early onset of the pandemic.
With that, the Happiness Index currently sits at its lowest level since Q1 2021.
The cost-of-living crisis and its impacts on wealth (perceived and real) are likely seeping into the Happiness Index as our levels of life satisfaction and happiness fall once again. The death of the Queen in early September may have also played a part in knocking UK happiness further.
As difficult as it is to predict anything right now, the UK economy is expected to slide into a recession between Q3 2022 and Q1 2023; driven primarily by the cost-of-living crisis and resulting consumer behaviour.
Cebr expects the recession to weaken the labour market and cause an uptick in unemployment. This dynamic will likely reduce workers’ bargaining power when it comes to wage increases.
Through recession, inflation is expected to spike and stay elevated well into the mid 2020s. The impact of continued high prices and slow wage growth will widen and consumer spending power will further weaken. With that, we have to anticipate more dents in the Wealth Index, with likely knock-ons in Happiness too.
Despite government support in energy bills (set to last until April as per the latest revision by current Chancellor Jeremy Hunt), UK customers are still set to pay significantly more for energy this winter than we have in years past.
Combined with the high cost-of-living, we can expect further impacts on Happiness as households have to make difficult choices. In Health, we have to also expect that some households will be forced to short their winter energy needs to make ends meet and inevitable health issues will come with doing so.
Sadly, it’s likely the Health Index will remain in a valley into early next year at least, just as Wealth and Happiness, in all probability, will too.