Consumers are feeling the effects of Brexit, UK political change and shifting tax rules – and it’s having a knock-on effect on how they view their finances. Heidi Allan, is the Head of Insights and Engagement at Neyber, who have produced a report: DNA of Financial Wellbeing 2017. She explains more.
We have surveyed 10,000 UK employees, as well as 500 HR directors, for our DNA of Financial Wellbeing 2017 report. Data was collected after the EU referendum took place, so reflects the feelings of consumers once the Brexit decision had been made.
Over a third of the UK’s workforce (35 per cent) say that Brexit has affected the way that they feel about their finances in general, with UK political change (27 per cent) and tax and legislation changes (25 per cent) also causes for concern.
Young workers in particular are sensing the pressure of what these changes will mean to them. The Brexit effect is the most intense amongst this age group, with 51 mper cent of 18-24 year olds feeling the heat from the EU referendum result on their overall finances, as well as 47 per cent of 25-34 year olds.
Both age groups’ approach to savings (42 per cent each for 18-24 year olds and 25-35 year olds) and property ownership (44 and 43 per cent) are particularly hard-hit by Brexit uncertainties.
UK political change is also driving uncertainty, with 27 per cent of all respondents saying that this affects how they feel about their general finances. Again, younger people are the most concerned, with 39 per cent of 18-24 year olds saying that the UK’s changing political landscape is impacting their views on finances. A third (34 per cent) say it is affecting how they feel about saving, and 33 per cent say it influences their feelings about property ownership. Borrowing is also impacted, with 27 per cent of 18-24 year olds saying that UK political change is shaping their views on this as well.
A quarter of the UK’s workforce are also worried about tax and legislation changes, and again 18-24 year olds (36 per cent) and 25-34 year olds (33 per cent) are most sensitive to the uncertainties. A total of 36 per cent of 18-24 year olds say tax and legislation is affecting their views on savings, 25 per cent say it is hitting how they view borrowing and 29 per cent property ownership.
Older workers are also worried, although to a lesser extent than the younger generations, possibly reflecting the greater numbers who are already on the housing ladder or have less need to borrow. Brexit and tax or legislation changes are still a significant concern for this generation, however, with 27 per cent saying that Brexit has affected how they feel about their finances in general, and 20 per cent saying it has influenced their views on saving. However, a smaller 9 per cent say that Brexit has affected how they feel about borrowing, and 12 per cent say it has affected property ownership. Tax and legislation had a bigger effect on savings (22 per cent) than Brexit for this age group, and the same number said tax changes have affected their thinking about finances in general.
What do these figures mean for younger workers and for the UK economy more generally? We are now faced with a general election and at least another two years of intense negotiations before there is any certainty around what ‘Brexit’ will really look like. Clearly it is already having a significant impact on the under 34s’ and how they feel about their finances. Could current uncertainties continue to impact saving, borrowing and property trends, storing up future problems for younger savers?
One possible solution lies in the workplace. Employers are aware that the political uncertainty is impacting their staff, with 61 per cent of the 500 HR directors saying that they believe Brexit is affecting how employees feel about their finances in general, and the same number saying that it is influencing workers’ feelings around saving.
If employers are aware of the issues that Brexit in particular is causing for their employees, they are also in a great position to help them with workplace savings products, low-cost loan arrangements and even support with housing. Young (and also more mature) workers cannot afford to have years of uncertainty around savings and general financial wellbeing as a result of the Brexit debate. They need support now.