High net worth individual confidence in UK economy rises, but areas of concern remain – Saltus Wealth Index

The Saltus Wealth Index – a barometer of HNWIs’ confidence in the UK economy and their personal finances – has shown some growth with the departure of the previous Government, but remains short of its peak in 2022.

The confidence of high net worth individuals (HNWIs) in the UK economy has risen to record levels, but specific challenges remain, according to the latest Saltus Wealth Index Report, published today.

Now in its sixth iteration, UK wealth management firm Saltus surveyed 2,000 people with assets of £250,000 or more. The latest Index level has risen to 66.9, up from 64.4 recorded in January 2024. The recent trend suggests that confidence levels have been gradually increasing since April 2023 but remain below the high recorded in February 2022 following the post Covid bounce.

This rise has been driven by confidence in the UK economy, with 84% of HNWIs now confident in the UK economy’s prospects, up 6% and a record level since this research was first published in October 2021. Confidence increases further when respondents think about their own wealth, with nine out of ten (91%) HNWIs confident in their own financial standing.

However, despite a positive picture overall there remain areas of concern. Significant numbers of HNWIs are delaying key life decisions due to the financial pressures they face, such as putting off starting a business (31%) or, for older HNWIs, their retirement (25%).

One of the specific pressure points identified is the rising cost of private education. The research suggests that 13% of HNWIs with children at private school will move them into state education in the next year, with significant numbers of children potentially having their education impacted in some other way due to the rapidly increasing cost of education. This trend will be exacerbated by the Government’s announcement that VAT will be added to school fees from January 2025. Just 15% of HNW parents say the addition of VAT will have no impact on them or their children at all.

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, said: “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.”

The Saltus Wealth Index Report provides an in-depth study into the views of HNWIs in the UK and the Index itself provides a simple barometer of the confidence and concerns this group has relating to the UK economy and their own financial circumstances. The Index ranges between 0 and 100, with higher values describing higher confidence in (and fewer significant concerns with) the UK economy and personal finances.