A combination of expected tax increases and the continued cost of living crisis are seen as the main threats to financial wellbeing, according to the latest survey of Family Building Society members, conducted in the run up to the Budget.
The cost of living crisis has been viewed as the biggest threat to financial wellbeing since the survey was first conducted in April 2023.
Member sentiment ahead of the Budget is largely negative, with 59% expressing concern about it and only 1% feeling positive. The strong expectation of tax increases, particularly on income, business, and inheritance are the main causes of concern, as well as the impact on pensioners, welfare and savings, including threats to cash ISAs. However, three-quarters of members said speculation has not affected their financial or retirement planning.
Here are some responses from those surveyed:
“Too many rumours. But expecting the worse. They have put off the budget to late November instead of the normal October as they have no idea what to do.”
“They are flip flopping and putting everyone on edge. People are taking money out of pensions which may or may not be a good idea, who knows!”
“People are not buying houses or moving as again, no one knows what is going to happen to stamp duty. Businesses are on hold as fear of more taxes. The outlook, for me, is very much worse than it has been for the last five years.”
“Higher taxes, restrictions to ISAs, lower savings rates, increased inheritance tax - nothing good.”
56% said the economy will slow down over the next six months, while a third feel that there will be no change. Only 5% believe the economy will grow. Several respondents said the Budget will “crash” or “stagnate” the economy.
However, while members are adjusting to persistent inflation, they remain cautious about interest rates, which only 40% expect to be cut by 0.25% over the next six months.
Housing supply reforms drew strong support for abolishing stamp duty for downsizers (62%), prioritising brownfield development (53%), and converting unused office space into homes (47%).
The pensions triple lock is “essential” to protecting pensioners’ incomes according to half the respondents, but some 23% acknowledge that it may need to be adjusted in the future.
Family Building Society's director of marketing, Alistair Nimmo, said: “While taxation has emerged as one of the leading perceived threats to financial wellbeing, alongside cost-of-living concerns, worries about pensions, job security, and global instability have eased.
“However, over a third of our members say that their children and grandchildren feel pessimistic about their own financial wellbeing and only 3.72% feel optimistic about the next six months.”
