"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"
- Mike Stimpson, partner at wealth management firm Saltus
Overall confidence in the UK economy has halved in less than six months among high net worth individuals (HNWIs), according to new research from Saltus.
Fewer than half (48%) of HNWIs have confidence in the UK economy, a drop from 84% in August 2024. This is the lowest level of confidence ever recorded by the Saltus Wealth Index Report, which has been tracking HNWIs’ confidence in the UK since 2021.
Confidence has now fallen significantly below the 67% recorded shortly after the infamous Liz Truss Budget in 2022.
A third (33%) say they feel ‘unconfident’, with those who say they are ‘very confident’ falling from 38% to just 19%, another all-time low.
The collapse in confidence reverses the finding of six months ago, which had shown increased 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 introduced by the Government and a series of negative economic figures.
These confidence levels align with HNWIs’ views of the Labour Government, with two thirds (66%) of the 36% of respondents who voted Labour at the last General Election now saying they regret doing so.
The main reasons cited for this regret are changes to Inheritance Tax (18%), adding VAT to private school fees (18%), the impact on business (16%), changes to tax thresholds and pensions (16%), changes to the Winter Fuel Allowance (15%), and the increase in Employer National Insurance (15%).
The vast majority (83%) of 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.
Others felt the Labour Government was likelier to tax by stealth in its approach, with one person saying: “they won’t raise rates but will freeze Income Tax and other thresholds, which is a tax rise.”
Furthermore, 47% now believe tax rises are the single biggest threat to their wealth, behind only inflation (52%) and up from 22% six months ago.
The Report also shows that HNWIs think high tax rates and a complex tax system remain the biggest barrier to wider economic growth: 43% cite this as the main issue, up from 23% before the last Budget.
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.”
