Brits’ wealth has seen a sharp decline in the first quarter of 2022 as the cost-of-living crisis takes its toll, according to the latest data from the LifeSearch Health, Wealth & Happiness 2022 Index.
The Index – compiled by modelling a range of data sources covering health, wealth, and happiness and monitoring changes over time – shows that 2021’s combined annual index score was 84.4, a slight rise on 2020’s score of 81.5, but still 15% lower than 2019’s pre-pandemic score of 99.4.
When studied in isolation, the UK’s wealth score for 2021 was 93.0 – a rise of 11% on 2020 – but fell sharply to 86.7 at the start of 2022 as the surge in the cost of living took its toll. The annual Index – conceived by LifeSearch, built by the Centre for Economics and Business Research (Cebr) and supported by ongoing consumer research – also found that a third (32%) of households feel financially worse off, rising to 40% among ethnic minority groups. This compares to just 24% of Brits who said they felt worse off 12 months earlier.
LifeSearch found that with inflation currently at 7%, a 30-year high, nearly three quarters of Brits (72%) expect to be worse off. Of this group, more than half think they will be worse off by at least £100 a month as a result of inflation, while one in 25 (4%) think they’ll be more than £1,000 a month down. On average, Brits think they will be worse off by £252 per month (£3,020 pa), rising to £271 for women and £299 among those aged 35-44. London is the region where people expect to be hit the hardest at £321 per month (£3,859 pa) worse off.
Overall, just 8% of respondents said they don’t think they’ll be worse off financially as a result of inflation; the remaining 20% were not sure.
According to the study from LifeSearch, the life insurance broker, 39% of Brits think the Covid pandemic has had a negative impact on their household finances, rising to 51% of people in ethnic minority groups, and higher still among Pakistani and Bangladeshi (58%) and Indian Brits (57%).
Furthermore, when asked in April 2022, three-quarters (74%) of adults said their mental health has been negatively impacted in the last two years and of these, the “rising cost of living” (28%), closely followed by “Covid restrictions” (27%), were the top causes. In comparison, just 7% of these said the conflict in Ukraine and threats from Russia had the most detrimental impact on their mental health.
The fear of bills rising is a significantly bigger concern now compared to last year, with almost half (45%) saying they are worried about the rising cost of bills; vs 24% last year. Older people (55+) are the most concerned (54%) about rising bills in 2022. Lack of savings (17%) is also a top concern for Brits this year – rising to 24% among ethnic minorities – followed by fears of higher taxes (19%).
Debbie Kennedy, chief executive at LifeSearch who commissioned the study, said: “While there may be a sense that after two long years the worst of the pandemic is behind us, the nation’s health, wealth and happiness is still not close to being back to levels seen pre-Covid. In fact, our happiness is at a record low, mental health issues remain high and the energy crisis, inflation and conflict in Ukraine point at another chapter of uncertainty.
“At a more granular level, our study reveals the pandemic pressures and consequences faced specifically by people in ethnic minority communities, where many have been hit harder over the last two years and the ripple effect may continue much longer. Many in those communities feel they’ve had to work harder, dig deeper and risk more to stay afloat.”