The cost-of-living crisis in the UK shows little sign of abating and it is predicted that it may well get worse before it gets better. Add in inflation and fuel cost rises and people are more than feeling the pinch.
Although there is plenty of news around groceries and people’s spending on luxuries like holidays and Netflix, there are a number of other areas in which the pinch is now being acutely felt by millions in the UK. all areas of the UK economy have been affected, including with regards to mortgages and personal finance, day to day spending and even health and medical care.
UK Interest Rate Rises
For homeowners and those with mortgages, people are feeling the pinch as mortgage interest rates are rising in line with the Bank of England’s base rate rise. With mortgage repayments rising, people are finding they have less and less money in their pockets to spend. Moreover, many people up and down the country are finding that selling up and downsizing is necessary to reduce mortgage costs.
Michael Forth of Property Sale Platform ProperEaze.co.uk commented:
“More people than ever are not just getting their houses and properties valued speculatively. We are seeing increasing numbers of homeowners that are actively selling up and downsizing. Ultimately, if downsizing means a smaller mortgage, with the equity built up in one property, people can actually save money and reduce the squeeze that the interest rate rise is causing.”
Day to Day Spending
When it comes to day-to-day spending, the overall spending power of the usually very active UK consumer base is starting to be felt by the wider economy, with retail sales already falling. With the combination of the cost of living, fuel price increases and the recent rises in National Insurance contributions, people are finding they have less money in their pocket to spend.
Samuel Davies of Kallyss.com said:
“The importance of disposable income should not be underestimated. Don’t forget that the money we all spend in the high street shop or on anything, goes into the wider economy and will also be taxed at some point down the line, boosting the UK’s public finances. It is vital that UK consumers are able to recoup the spending power that the cost-of-living crisis combined with tax rises has hit badly.”
Health and Medical Care
The UK proudly has a publicly funded National Health Service (NHS), free at the point of use. However, the Covid-19 pandemic exacerbated the problems faced by the NHS, with an ever-growing backlog now a reality for the foreseeable future. Thus, although paying for medical care is not necessarily something traditionally undertaken by the masses in the UK, the desire for private healthcare is growing, with people prioritising their health over luxuries.
A representative of GlobMed UK, a Global Health Manager commented:
“Never before has our mortality been more apparent. The Covid pandemic has shown the importance of having our health and healthcare options in check. With people feeling the squeeze when it comes to their personal finances, more people than ever are putting health above all else. Private healthcare and medical insurance, has traditionally allowed people to be seen quicker for medical issues and get the treatment they need when the NHS waiting lists are too long. Although there is a big squeeze on people’s finances now, more so than ever, people are actually spending more on their health.”
The Effects on UK Business
The combination of living cost increases, fuel price rises and rapid inflation mean that not only is the spending power of average consumers diminished at least to some extent, but the money that people do have in their pockets available to spend becomes worth less.
Hugo Anglesford of Doddler said:
“The effects on UK businesses of the cost-of-living crisis is profound. With more people having less money in their pockets, the trickle-down effect that businesses will experience may well culminate in lower turnover, lower profits and therefore lower taxable revenue. As a result, there could well be redundancies coming down the track which unfortunately mean more people will end up struggling to get by. There is no easy solution, but helping businesses throughout the UK will be a good start.”
Produced and Sponsored by DSR Digital.