The financial health divide between the North and South has deepened in the last year, as St. James’s Place’s latest Financial Health Index reveals the economic disparity between UK regions.
According to the Index, financial health is now seven times higher in the South East than the North East – a significantly bigger gap than last year, when the South East’s financial health score was four times higher than that of the North East.
The South East has the highest level of financial health in the UK, scoring 77.2, while the North East is the worst performing region, with a score of just 11.4, falling from 19.1 last year.
This highlights the impact the last year of high inflation and rising interest rates has had on wealth and wellbeing, as worse off regions in the North of England have regressed (North East, North West and Yorkshire and Humber) while better off regions in the South (South East, East of England, South West and London) have seen an improvement in their scores
Published today, the SJP UK Financial Health Index, developed in conjunction with the Centre of Economics and Business Research (Cebr), analyses how wealth is distributed across the nation and where financial health is strongest, comparing results to previous years.
The Index is broken down into three distinct pillars1: Wealth, Wealth Drivers, and Perceived Financial Wellbeing, with each pillar consisting of several indicators which measure a certain element of an individual’s financial position.
SJP’s Index also found that as many as a third (35%) of UK adults currently do not feel financially resilient, up from 29% in the last Index, and believe they’d need a 2.3x increase in wealth to make them feel financially resilient.
Furthermore, three in five do not feel financially comfortable, an increase of eight percentage points from 51% last year, while 81% do not consider themselves wealthy.
Almost half of the public said the cost of living is their main barrier to wealth growth, rising to 55% among those with household income below £10,000, compared to 36% of those with income above £80,000. Inflation was the next most frequently cited barrier to wealth growth (24%), followed by the impact of low interest rates (21%).
Looking at the key reasons behind wealth growth, just under a third reported rising house prices as the most prominent driver, followed by 27% who said pay rises.
A fifth said lifestyle changes enabling higher savings had driven their wealth growth, although this figure has dropped sharply from 30% who said the same last year, reflecting the pressures on disposable income that people have faced in the last year.
SJP’s research also found that only a third (34%) have a financial plan for the future3 – dropping from 38% in 2021. Notably the number with a financial plan in London fell by two-fifths, from 63% to 37%, while in the East of England 29% have a plan, compared to 42% previously. However, two-fifths (40%) of Scottish adults have a financial plan, up from 35%.
Alexandra Loydon continues:
“Financial health assesses our overall financial wellbeing, including how comfortable and resilient we are to pressures on our finances, and it’s concerning that an increasing number of people feel financially vulnerable this year. While many factors that influence this are out of our control, it’s important to take charge of the things we can have an impact on. During difficult periods, having a plan to take control of your financial situation can be really beneficial both for the short and long term. Whether that is putting in place monthly budgets to understand where your money is going, or asking yourself whether you really need to make purchases will help keep everyday spending in check, or reviewing your savings to ensure you’re making the most of tax allowances and reliefs. This can all make a real difference to your financial balance, and how you feel about your financial situation.
Alexandra Loydon, Director of Partner Engagement and Consultancy, St. James’s Place, comments:
“This year’s Financial Health Index shows that people’s wealth and financial wellbeing has deteriorated in certain regions, but not in others, underlining the scale of efforts needed for levelling up across the country.
Clearly the financial environment in the last year or so has impacted some more than others, and it’s likely that this will only be exacerbated in the near future, as the effects of double-digit inflation, high interest rates and turbulent markets continue to bite over the next few months.”
