A new measure of consumers’ financial comfort has found that 34-year old men are the most comfortable in the UK with those in their 70’s the least comfortable.
The study,commissioned by Hitachi Personal Finance and co-authored by Peter Grindrod, professor of Mathematics at the University of Oxford , combines economic data with research into people’s attitudes to the economy, personal finance and their confidence to buy goods and services.
The new index will track Britain’s changing attitudes on a quarterly basis to provide an insight into underlying consumer confidence and the wider economy. The study also explores the relative financial comfort of consumers against their age, location, earnings, education, homeownership and political affiliation.
Key findings:
- 34 year old males are the most comfortable
- Males between 30 and 35 are much more comfortable than women of the same age
- Over 60s are less comfortable than people in their 30s and 40s
- People with higher earnings are more comfortable
- Liberal Democrat supporters are the most comfortable and UKIP the least
- People who rent have the lowest comfort index
- People with a mortgage are the most confident about their employment and job prospects
- People in the North East have the least confidence in the job market but are the most bullish about buying goods and services
- People in Northern Ireland are the least confident that now is a good time to buy goods or services
- Top five regions most bullish about buying goods and services: North East, East of England, East Midlands, London, West Midlands and Wales (share 5th)
- People in Wales are the least comfortable with the economy
People in the South East are the most comfortable with their place in the economy with an overall index score of 46.8, whilst those surveyed in Wales are the least comfortable with a score of 37.4.
- South East: 46.8
- London: 46.2
- East of England: 44.2
- West Midlands: 44
- Yorkshire: 43.2
- South West: 42.4
- East Midlands: 42
- Northern Ireland: 41
- North West: 40.6
- Scotland: 40.2
- North East: 38.4
- Wales: 37.4
The South East and London topped the leagues for both confidence in the economy and their employment prospects.
The comfort of an individual rises between the ages of 18 and 34 and then drops, with people in their 70s the least comfortable group, 74 year olds have an index score of 22.6. Broadly speaking, males have a higher comfort index than females.
Commenting on the study Gerald Grimes, managing director of Hitachi Personal Finance said: “We commissioned the Comfort Index to better understand how people are feeling about the economy and their own financial position. It is clear from the findings that confidence is returning with the economic recovery but it is a very patchy picture across the country.”
The more you earn the more comfortable you are, with an increase of half an index point for every £1,000 earned. However, over £100,000 income a year it makes little difference. People on lower incomes show a significant drop in their index score as they age. People who earn over £100,000 a year have a score of 88.8, whilst those who earn under £20,000 have a score of 35.7.
Those with a post graduate degree are more comfortable, 52.2, than those with no qualifications, 30.8.
The study produced some surprising results. People in the North East had the least confidence in their job prospects but the most confidence that ‘now was a good time to buy goods and services’.
People who rent have a lower comfort index, 36.9 than those who own their own house, 52. Yorkshire stands out as the region where renters are the most comfortable with the economy 42.4. The East Midlands is the region where renters are the least comfortable 30.1. Those in temporary accommodation had the lowest index score at 35.6.
People in long term partnerships are marginally more comfortable than married couples, 46.9 and 45.9 respectively. Those who are divorced, 33.2 or widowed, 30.7, had the lowest comfort index scores.
Professor Grindrod said: “The study provides a valuable insight into how comfortable people are with their own finances and ability to buy consumer goods or services. The creation of the index allows us to compare across different demographics in a like for like way. The use of macro-economic data allows us to make sense of the findings to create a robust picture of the UK today.”
ENDS
Notes to editors:
Liberal Democrat supporters are the most comfortable with the economy and UKIP supporters the lowest. Geography plays an important part in the index when looking at political parties. For example, for the West Midlands the comfort index is 44, whereas Liberal Democrat supporters in the region have a comfort index of 60.7. Supporters of the Green Party in Yorkshire have the highest comfort index in the region.
For each region we can identify the political party whose supporters have the highest comfort index:
- North East: Liberal Democrats, 60
- Scotland: Liberal Democrats, 51.1
- North West: Liberal Democrats, 54
- West Midlands: Liberal Democrats, 60.7
- South West: Labour, 58.1
- Wales: Conservatives, 49.7
- Yorkshire: Green Party, 55
- East Midlands: Green Party and Conservatives, both 51.1
- East: Green Party, 62.7
- London: Conservatives, 50.6
- South East: Liberal Democrats, 50.6
- Northern Ireland: Labour,45.9
Comfort index methodology:
The index uses a survey of 2000 individuals who were asked five key questions about the economy:
- How would describe the state of the economy? (Q1)
- How would you describe the state of your own finances? (Q2)
- Considering the state of your finances, is now a good time to buy goods or services? (Q3)
- Are you employed? (Q4)
- Do you feel confident about your job prospects? (Q5)
Each question was scored, with positive answers scoring more highly than negative answers. The results were then normalised to fit into a range of 0 (being the worst) and 100 (being the best). The comfort index therefore allows us to compare across different demographics in a like-for-like way. The responses to the survey were collected in December 2013.
| Region | Q1 | Q2 | Q3 | Q4 | Q5 | Total | Comfort Index |
| South East | 36 | 48 | 40 | 59 | 51 | 234 | 46.8 |
| London | 38 | 46 | 41 | 61 | 45 | 231 | 46.2 |
| East of England | 31 | 47 | 42 | 54 | 47 | 221 | 44.2 |
| West Midlands | 30 | 44 | 39 | 61 | 46 | 220 | 44.0 |
| Yorkshire | 31 | 48 | 40 | 57 | 40 | 216 | 43.2 |
| South West | 32 | 46 | 38 | 54 | 42 | 212 | 42.4 |
| East Midlands | 33 | 47 | 42 | 46 | 42 | 210 | 42.0 |
| Northern Ireland | 29 | 41 | 35 | 59 | 41 | 205 | 41.0 |
| North West | 31 | 45 | 39 | 50 | 38 | 203 | 40.6 |
| Scotland | 29 | 46 | 36 | 48 | 42 | 201 | 40.2 |
| North East | 32 | 46 | 44 | 40 | 30 | 192 | 38.4 |
| Wales | 25 | 42 | 39 | 48 | 33 | 187 | 37.4 |
Analysis was also undertaken to correlate the Comfort Index scores against macro-economic data including: GDP, Regional Labour Market Statistics, Interest Rates, Quantitative Easing, Sterling Value against Dollar / Euro, Bank of England Indicators, Private Sector employment indicator and the English Business survey.
Visit: www.hitachipersonalfinance.co.uk
Hitachi Personal Finance is part of Hitachi Capital Consumer Finance, the UK’s leading retail point of sale credit provider, providing over one billion pounds of consumer lending each year to over five million UK customers. The company has over 30 year experience has supported retail in the UK by increasing lending year on year for the last five years.