UK confidence in financial inclusion plummets despite strengthening economy
People in the UK are feeling significantly less financially included than they used to be, Morning Wire can reveal, as the pressure of the cost of living crisis continues to weigh on the public .
The proportion of people who say they feel financially included in the UK has dropped to only 56 per cent from 73 per cent a year ago, as only 41 per cent said they see the government as behaving in a financially inclusive way, according to a survey of 500 Brits from Principal Financial Group.
Views on individual economic circumstances have quickly deteriorated, with just 28 per cent saying they are confident they could find a new job if needed, down from exactly half a year ago, while 59 per cent think they will need to work beyond retirement age.
Seema Shah, chief global strategist at Principal Asset Management, said: “Understanding and encouraging financial inclusion should be an imperative not only for policymakers, but also for investors.
“The extent to which people feel financially included and their perceptions of how effectively governments, financial systems and employers support their wellbeing can give an indication of longer-term confidence and spending patterns which could underpin or undermine economic health.”
The proportion of people who see the financial system as financially inclusive has fallen less sharply than other metrics, from 61 per cent to 58 per cent.
However, employers have seen the largest fall in consumer trust of any group, with those who agree their employer acts in a financially inclusive way has fallen 14 points, from 70 per cent to 56 per cent.
This has carried over into the economy at large, with only 31 per cent of Brits stating they feel confident about their near-term economic outlook, while just 39 per cent feel able to manage their debts.
The news comes despite a raft of upgrades to economic forecasts for the UK from analysts, suggesting that the strengthening macroeconomic environment was failing to translate through to UK households.
“UK consumer confidence has remained subdued over the past 12 months as inflation has remained sticky and rates have held higher for longer,” explained Shah.
“In real terms, UK households have been poorer over the past 12 months. Perhaps unsurprisingly the population is less convinced that actions taken by the government, the financial system or their employer are doing much to improve their financial circumstances.”
“Investors should take note of this sentiment. Economies where people don’t feel they can manage their debt or rely on steady employment are not conducive to confidence and consumer spending.
“In the near-term, aided by greater political stability, the UK looks more attractive to us than it has for some time, but any growth plan from the new government will need consumers to feel they are able to spend.”