Confidence in the British economy has slumped to a record low among the country’s wealthiest people, a new survey reveals today.
The poll of “high net worth” individuals (HNWI) with at least £250,000 in investible assets found that only 48% have confidence in the economy, down from 84% six months ago, according to the latest Saltus Wealth Index Report.
This is the lowest ever reading since the index was launched in 2021, falling even below the 67% recorded shortly after the infamous Liz Truss Budget in September 2022..
Most of those who voted for Labour at the election in July now regret their decision - and overwhelmingly think taxes are set to rise again.
The findings, based on surveys of 2000 respondents last month, will revive fears that the country is suffering a damaging exodus of wealth creators disillusioned by higher taxes and what they see as anti-business culture. A report last month suggest more than 10,000 millionaires left the UK last year.
The Saltus Wealth Index - created by Dr Mike Peacey of the University of Bristol - has fallen from 66.9 to 58.2, the lowest level ever recorded
A third of those polled say they feel ‘unconfident’, with those who say they are ‘very confident’ falling from 38% to just 19%, another all-time low. This is the highest level of negative sentiment ever recorded.
The collapse in confidence reverses the finding of six months ago during a burst of optimism following the Labour Party’s victory at the General Election.
Confidence in August 2024 - after the Labour Party came to power but before the October Budget - stood at 84%, up from the 78% recorded in December 2023.
This has now collapsed to its current level of 48% on the back of a range of unpopular policies and a run of gloomy economic figures.
Two thirds of the 36% of respondents who voted Labour at the last General Election now saying they regret doing so.
The main reasons given are Changes to inheritance tax, adding VAT to private school fees, the impact on business, changes to tax thresholds and pensions, changes to the Winter Fuel Allowance, and the increase in Employer National Insurance,
More than eight out of ten HNWIs expect the Labour Government to raise taxes further in the next 12 months, with respondents predicting capital gains tax (38%), Income Tax (37%) and Inheritance Tax (35%) as the most likely to be increased.
One respondent said the Labour Government will “raise any tax they can get away with”, with another adding “you just know that a Labour Government will increase the tax take where and when it can”.
Others felt the Labour Government was likelier to tax by stealth in its approach, one saying: “they won’t raise rates but will freeze income tax and other thresholds, which is a tax rise.” Almost half now see tax rises as the single biggest threat to their wealth, behind only inflation (52%) and up from 22% six months ago.
Mike Stimpson, partner at wealth management firm Saltus, said: “The extent to which the confidence of high net worth individuals has collapsed demonstrates a missed opportunity for the new Government, who had high levels of support when they came to power and drove the highest levels of HNWI confidence in the UK economy we have ever recorded.
“Confidence is a critical component in growth, and the fact that this vitally important group of people - the wealth creators, employers and investors in the businesses of tomorrow - feel that the UK economy is not on the right track is a cause for concern.”
Dr Michael Peacey, Senior Lecturer, School of Economics, at the University of Bristol, said: “The decline in the Index reflects substantial shifts across several key measures and underscores a period of mounting apprehension among HNWIs about the UK’s economic prospects. There has also been a shift in how HNWIs feel about taxation in the UK, with anxieties about taxes rising further continuing to weigh heavily on HNWIs. The survey also suggests that tax changes are the primary reason that around 66% of HNWIs who voted Labour in 2024 now regret that decision.
“Looking ahead, it will be interesting to observe whether HNWIs follow through with their plans to react to the UK's economic challenges. Such actions could have significant implications for both the domestic economy and global perceptions of the UK as a hub for wealth creators.”
