In a sign that economic confidence among the UK’s wealthiest is returning, the Saltus Wealth Index, the nation’s only barometer of high net worth individuals’ confidence, has registered a 2.3% increase over the past six months.
Created in collaboration with wealth manager Saltus, Censuswide and Dr. Michael Peacey of the University of Bristol, the index reflects the views of over 2,000 individuals possessing investable assets exceeding £250,000. Despite this recent uptick, the index, currently standing at 60.9 (out of a possible 100), is still lower than the 67.7 recorded in May 2022.
One factor driving the index upward is a 4% increase in the number of high net worth individuals (HNWIs) feeling optimistic about the UK economy, now sitting at 71%. Nevertheless, concerns about inflation, potential tax changes, and rising interest rates continue to cloud their outlook.
Indeed, the survey found that 28% of HNWIs are concerned about inflation, and 22% see potential tax changes as a significant issue, up from 17% in January. An overwhelming 87% express worry about the impact of rising interest rates on their mortgage affordability.
Moreover, heightened financial anxiety is evident, with the percentage of HNWIs admitting that their wealth causes them anxiety rising from 60% to 64%. A fifth have also curtailed their pension contributions to assist family members financially.
“Though the Saltus Wealth Index has rebounded from 59.5 to 60.9, it remains far below the peak confidence recorded 18 months ago,” said Michael Stimpson, partner at Saltus. “Our HNWI respondents are worried about inflation, interest rates, and the future financial planning challenges, especially as economic pressures persist.”
Peacey emphasises the sluggish pace of confidence recovery among HNWIs. While they may be shielded from the brunt of the cost-of-living crisis, many HNWIs are still feeling the pinch, particularly those affected by rising mortgage rates or supporting their children financially.
In light of the mix of challenges and opportunities, Peacey advises that “making appropriate decisions to protect their wealth will be especially important for many HNWIs. It’s perhaps unsurprising that the only measure in the Index to fall significantly corresponds to the increased anxiety caused by money.”
