North-South wealth divide deepens, as St. James’s Place’s Financial Health Index reveals extent of economic disparity across the UK
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Overall financial health is seven times higher in the South East than in the North East – a significantly greater gap than this time last year
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In the last year, regions in the North of England have seen their overall financial health worsen, while those in the South have enjoyed improvements
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As cost-of-living pressures continue, more than a third (35%) of the UK do not feel financially resilient, needing a 2.3x increase in wealth to feel resilient, and two-thirds (59%) do not feel financially comfortable
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Only a third (34%) of the UK have a financial plan – falling from last year
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SJP’s Financial Health Index measures the UK’s wealth and wellbeing, and takes into account how comfortable and resilient regions feel to handle pressure on finances
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The financial health divide between the North and South has deepened in the last year, as St. James’s Place’s latest Financial Health Index reveals the economic disparity between UK regions.
According to the Index, financial health is now seven times higher in the South East than the North East – a significantly bigger gap than last year, when the South East’s financial health score was four times higher than that of the North East. The South East has the highest level of financial health in the UK, scoring 77.2, while the North East is the worst performing region, with a score of just 11.4, falling from 19.1 last year. This highlights the impact the last year of high inflation and rising interest rates has had on wealth and wellbeing, as worse off regions in the North of England have regressed (North East, North West and Yorkshire and Humber) while better off regions in the South (South East, East of England, South West and London) have seen an improvement in their scores:
| 2022 Financial Health Index Ranking | Region | 2022 Financial Health Index Score | 2021 Financial Health Index Score | Year on Year Change in Score |
|---|---|---|---|---|
| 1 | South East | 77.2 | 75.7 | +1.6 |
| 2 | East of England | 72.3 | 68.0 | +4.3 |
| 3 | South West | 69.6 | 68.6 | +0.9 |
| 4 | London | 59.6 | 58.5 | +1.0 |
| 5 | West Midlands | 48.8 | 42.8 | +6.0 |
| 6 | East Midlands | 48.7 | 45.0 | +3.8 |
| 7 | Wales | 42.5 | 32.1 | +10.5 |
| 8 | Scotland | 41.0 | 53.2 | -12.3 |
| 9 | North West | 33.9 | 36.0 | -2.1 |
| 10 | Yorkshire and the Humber | 28.9 | 32.2 | -3.3 |
| 11 | Northern Ireland | 24.0 | 21.0 | +3.0 |
| 12 | North East | 11.4 | 19.1 | -7.7 |
Published today, the SJP UK Financial Health Index, developed in conjunction with the Centre of Economics and Business Research (Cebr), analyses how wealth is distributed across the nation and where financial health is strongest, comparing results to previous years. The Index is broken down into three distinct pillars1: Wealth, Wealth Drivers, and Perceived Financial Wellbeing, with each pillar consisting of several indicators which measure a certain element of an individual’s financial position.
Alexandra Loydon, Director of Partner Engagement and Consultancy, St. James’s Place, comments: “This year’s Financial Health Index shows that people’s wealth and financial wellbeing has deteriorated in certain regions, but not in others, underlining the scale of efforts needed for levelling up across the country. Clearly the financial environment in the last year or so has impacted some more than others, and it’s likely that this will only be exacerbated in the near future, as the effects of double-digit inflation, high interest rates and turbulent markets continue to bite over the next few months.”
Regional changes – wealth and wealth drivers
Despite the economic climate, most regions saw year-on-year increases in the Overall Wealth and Wealth Drivers pillars. The East of England, West Midlands and the South East recorded the biggest rises in overall wealth (+11.3, +10.9 and +10.4 respectively). The East of England, which ranked 3rd for overall wealth, can attribute this to a growth in mean household property wealth, which increased significantly by 30.6 points since last year, as the housing market enjoyed strong house price growth for most of 2021.
Only three regions – the South West, Northern Ireland and the North East – saw a decline in their overall wealth compared to last year, with the South West seeing the largest fall of -6.0 points, mostly due to a marked decline in their mean household pension wealth score, which fell 20.7 points from 65.2 in 2021, to 44.5 in 2022.
London tops the Wealth Driver ranking, namely due to the capital’s performance in the median gross annual earnings for full-time employees, average investment income and annual house price growth indicators. The West Midlands, the South West and the East Midlands saw the largest gains year-on-year (+13.1, +12.1 and +10.4 respectively). While the South East was the only region alongside the North East to perform worse in this category than last year, due to drops in the share of workers on temporary contracts and average investment income, it still ranked second overall.
Majority of UK does not feel financially healthy
However, although overall wealth has increased across many regions, the majority of regions saw a deterioration of their perceived wellbeing, as financial pressures rose in the last year. While Scotland topped this ranking in the last Index, this time it’s seen a noticeable fall with a 61% drop compared to last year, and is now third bottom behind Yorkshire and the Humber and the North East, despite coming mid-table in the overall wealth and wealth drivers pillars. This fall is mostly due to a 91.8 point drop in how people feel their financial constraints impact their quality of life. The North East’s bottom ranking – a 51% decline in performance in this pillar - is largely down to the region’s ability to handle an unexpected expense.
Despite strong performances in the Wealth and Wealth Drivers pillars, the South East only ranks 6th out of the 12 regions when it comes to perceived wellbeing, mostly because of the region’s relatively poor performance in the ability to handle an unexpected expense and whether financial constraints impact quality of life indicators.
A third of the UK feels financially vulnerable
SJP’s Index also found that as many as a third (35%) of UK adults currently do not feel financially resilient, up from 29% in the last Index, and believe they’d need a 2.3x increase in wealth to make them feel financially resilient.2
Furthermore, three in five (59%) do not feel financially comfortable, an increase of eight percentage points from 51% last year, while 81% do not consider themselves wealthy.
Cost of living is main barrier to wealth growth
Almost half (47%) of the public said the cost of living is their main barrier to wealth growth, rising to 55% among those with household income below £10,000, compared to 36% of those with income above £80,000. Inflation was the next most frequently cited barrier to wealth growth (24%), followed by the impact of low interest rates (21%).
Looking at the key reasons behind wealth growth, just under a third (32%) reported rising house prices as the most prominent driver, followed by 27% who said pay rises. A fifth (20%) said lifestyle changes enabling higher savings had driven their wealth growth, although this figure has dropped sharply from 30% who said the same last year, reflecting the pressures on disposable income that people have faced in the last year.
Financial planning less of a priority
SJP’s research also found that only a third (34%) have a financial plan for the future3 – dropping from 38% in 2021. Notably the number with a financial plan in London fell by two-fifths, from 63% to 37%, while in the East of England 29% have a plan, compared to 42% previously. However, two-fifths (40%) of Scottish adults have a financial plan, up from 35%.
Alexandra Loydon continues: “Financial health assesses our overall financial wellbeing, including how comfortable and resilient we are to pressures on our finances, and it’s concerning that an increasing number of people feel financially vulnerable this year. While many factors that influence this are out of our control, it’s important to take charge of the things we can have an impact on. During difficult periods, having a plan to take control of your financial situation can be really beneficial both for the short and long term. Whether that is putting in place monthly budgets to understand where your money is going, or asking yourself whether you really need to make purchases will help keep everyday spending in check, or reviewing your savings to ensure you’re making the most of tax allowances and reliefs. This can all make a real difference to your financial balance, and how you feel about your financial situation.
We are also mindful at St. James’s Place of the need to ensure people can be more financially aware. We have for many years been running a programme through our Partnership delivering financial education in schools and we have recently partnered with Young Enterprise to support the accreditation of schools looking to become Centres of Excellence (CoE) for financial education. Whilst our work in this area addresses just the tip of the iceberg right now, over the longer term it will start to help more people and prepare the next generation for greater financial resilience and the importance of planning for the future.”
Notes to Editors
This information is for the sole use of journalists and media professionals, and has not been approved by St. James’s Place Financial Promotions. Any calculations shown are for illustration purposes only and are not guaranteed. Actual investment returns may be lower than those illustrated.