According to the most recent Saltus Wealth Index Report, high net worth individuals’ (HNWIs’) trust in the UK economy has reached a record high, yet certain challenges still exist.
In its sixth iteration, 2,000 individuals with assets of at least £250,000 ($334,261) were polled by UK wealth management business Saltus.
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The most recent Index level is now 66.9, having increased from 64.4 in January 2024. The current pattern indicates that while confidence has been progressively rising since April 2023, it has not yet reached the peak set in February 2022 after the post-Covid rebound.
Confidence in the UK economy has served as the main driver of this increase; 84% of HNWIs are now optimistic about the country’s economic future, a record level reached since the data was originally released in October 2021 and an increase of 6%.
When respondents consider their own wealth, the trust they have grows even more, with nine out of ten (91%) HNWIs feeling good about their own financial situation.
Even yet, there are still certain areas that need to be addressed. Due to the financial strains, they experience, a sizable portion of HNWIs is delaying important life decisions.
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By GlobalDataExamples of these decisions include putting off establishing a business (31%) or, for older HNWIs, retiring (25%).
One of the highlighted pressure areas is the increasing cost of private education. In accordance with the study, 13% of HNWIs with children in private school will transfer them to state school in the coming year, with a considerable number of children’s education potentially being damaged in some other way as a result of the rapidly rising educational costs.
This pattern will be worsened by the government’s proposal that VAT will be applied to school fees beginning January 2025. Only 15% of high-net-worth parents believe that adding VAT will have no effect on them or their children.
Mike Stimpson, partner at Saltus, said: “The Saltus Wealth Index has become an important measure of how the constituency that will fund the Government’s programme feel about the direction of the UK. The increase of the Index in this survey is a response to the removal of uncertainty around the stability of the previous Government and some more positive economic indicators recently. However, there is still considerable anxiety among this important group around tax, inflation, interest rates, and rising costs in a number of areas, including private education.”
Dr Michael Peacey, senior lecturer, School of Economics, at the University of Bristol, added: “The Index now stands at 66.9, its highest level since early 2022, a rise from the previous score of 64.4. This uplift in sentiment follows positive economic developments in the UK, including inflation moving closer to target levels and expectations of forthcoming interest rate reductions. As a result, a lower proportion of HNWIs now consider issues relating to inflation and interest rates to be significant risks to their wealth (down from 71% to 60%). This tick up in optimism is also reflected in the increasing confidence HNWIs have in both their personal finances and the broader UK economy.
“However, despite the growing optimism, there are lingering concerns. The upcoming Budget and the policies of the new Labour Government are clearly weighing heavily on the minds of many HNWIs. Although the most significant tax announcements are still pending (the survey was undertaken in the aftermath of the July General Election), the proportion of respondents who feel their current tax burden is appropriate has already declined from 64% to 58%. There is growing apprehension about potential changes to inheritance tax and capital gains tax, which are the two taxes which HNWIs already think are the least fair.”
