Consumer perception of the financial inclusivity of governments, financial systems, and employers offer insights into long-term investment risks facing economies.
- The percentage of people who say they feel financially included in the UK has fallen from 73% to 56% over the past year.
- Only 41% see the government as behaving in a way which is financially inclusive.
- Only 28% of people say they are confident they could find a new job if they needed, down from 50% 12 months ago.
- 59% think they will need to work beyond retirement age.
The UK population feels significantly less financially included compared to last year, according to the latest research from Principal Financial Group.
The percentage of people who say they feel financially included in the UK has fallen from 73% to 56% over the past 12 months, as a challenging economic environment has continued to hit household wallets and financial confidence.
Principal’s research analyses financial inclusivity based on the support provided by employers, the government, and the financial system, and considers how these findings impact the investment case for global markets.
Only 41% see the government as behaving in a way which is financially inclusive, down seven percentage points from 48% last year. The proportion of people who see the financial system as financially inclusive has also fallen, albeit less sharply from 61% to 58%. But it’s employers who have seen the largest fall in consumer trust; the percentage of people who agree their employer acts in a way which is financially inclusive has fallen 14 points from 70% to 56%.
Despite the imminent prospect of interest rate cuts, only 31% of UK respondents say they felt confident about the near-term economic outlook. In particular, only 28% of people say they are confident they could find a new job if they needed, down from 50% 12 months ago. Similarly, little over a third (39%) feel able to manage their debt, down from 45% this time last year.
On a longer-term basis, UK expectations of their financial inclusion are no less pessimistic. While 56% agree their employer provides a generous pension plan, 59% think they will need to work beyond retirement age. A third (33%) are not able to meet current financial obligations while also saving for retirement.
Seema Shah, Chief Global Strategist, Principal Asset Management, commented: “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.
“UK consumer confidence has remained subdued over the past 12 months as inflation has remained sticky and rates have held higher for longer. 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.”
