The Office of National Statistics has combined its data on personal and economic wellbeing to launch a new index, giving a more complete picture of the nation’s financial health.
This is part of a new series it will publish on people and prosperity.
This new index shows that over the latest quarter economic indicators, such as income and spending, have continued to increase. However over the longer term the picture is less positive. The index shows there has been a levelling off when it comes to people’s wellbeing. This has been matched by more negative expectations about the future.
The figures show that in the third quarter of 2018 there was an increase in real household disposable income per head, up 0.7 per cent compared with the year before. Over this period there was a similar rise in earnings, employment and household spending and improved anxiety ratings.
However, since the end of 2017 the ONS says that improvement have levelled off when it comes to personal wellbeing. This includes scores for “average happiness”, “life satisfaction” and “worthwhile ratings”.
This matched recent trends mapping net household financial wealth and household disposable income per head.
Since the start of 2013, household debt per head has been increasing and is now 133 per cent of disposable income. At the same time spending per person has outgrown income by £119 since the second quarter of 2016. The ONS says this supported previous analysis that people may be living beyond their means.
The ONS says that people perceive the economy and their personal financial situation will worsen over the next 12 months, continuing more pessimistic views seen since the beginning of 2018.
It adds though that these tends are not necessarily equally distributed across different parts of society. For example, between 2011 and 2016 financial years, average income for the bottom 20 per cent of households increased by 4.8 per cent or £589, while for the top 20 per cent it increased by 6.7 per cent or £4,123.
The ONS head of inequalities Glenn Everett says: “Despite high levels of employment, rising incomes and spending across UK households, people are not reporting increases in their well-being. This may be due to worries about rising debt repayments, which could be driving concerns about their future financial situation.”
Quilter’s corporate affairs director Jane Goodland says there is a need for mental health education and financial eduction to be combined in schools to give the next generation to tools to change the trend identified by the ONS.
“A bit of pessimism is said to be healthy, but the persistent financial worries plaguing the nation are adversely impacting well-being, figures from the ONS show.
“This financial strain on society is having an adverse impact on well-being as the figures show ratings of life satisfaction has been levelling off in recent years. Average ratings of life satisfaction in the UK have now been at 7.69 since June 2017. Before this, life satisfaction had been steadily increasing since March 2012, where the average rating was at 7.42.”
She adds: “People have consistently been living beyond their means for years. And now fears that they will never be debt free are growing and people believe their economic and personal financial situation will get worse in the coming year. It’s of little surprise then that since 2016 the level of pension and ISA savings have been stagnant while debt has been increasing. Ideally, the see-saw effect should be going the opposite way.