4:00 AM 9th September 2021
Yorkshire And The Humber Faces £38bn Savings Shortfall According To Yorkshire Building Society Analysis
Consumers are currently facing a £371bn savings shortfall when it comes to feeling able to withstand a financial shock, according to Yorkshire Building Society’s latest research report, The Nation’s Nest Egg. When looking at Yorkshire and the Humber in particular, this figure stands at £38bn.
The report, which was conducted in partnership with the Centre for Economics and Business Research (Cebr) finds that despite Covid-19 restrictions helping many people to increase their savings pot, UK adults require a nest egg of £17,465 to feel financially secure with the average Briton needing an additional £7,220 to reach this goal. Whereas, consumers in Yorkshire and the Humber face a tougher challenge, with the average person requiring an extra £8,798 to feel financially comfortable.
The study seeks to analyse consumers’ financial resilience – their ability to withstand financial shocks and how that impacts their behaviour. It reveals that with the turmoil of the pandemic, financial resilience in Yorkshire fell from 53 of out 100 in 2019 to 40 in 2020. Whereas, the UK’s overall financial resilience has improved over the last year, rising to 57 out of 100, up from 44 in 2019. This score has been determined by assessing four key pillars which can be considered together to present an overall picture of financial resilience: shock resilience, probability of income shock, financial health and ability to plan for difficulty.
The shock of the last year has caused many to reassess their attitudes towards savings, and as a result almost two fifths (39%) of those in Yorkshire state they will save more carefully and 38% will spend more carefully post pandemic.
People have also become aware of the impact that money worries can have on their wellbeing, with a third (32%) of consumers in Yorkshire stating that greater financial security would make them feel less anxious or depressed.
To increase our financial resilience, most people in Yorkshire would like more money in cash savings (34%), followed by reducing their debt (32%) or for a member of their household increasing their monthly income (20%).
Despite the year-on-year improvement in the nation’s ability to cope with income shocks, Yorkshire Building Society believes more needs to be done to help people to build their financial wellbeing through savings, particularly in light of this new analysis.
Nitesh Patel, strategic economist at Yorkshire Building Society said:
“The country has been battling the impacts of the pandemic for the last 18 months, and we can now paint a comprehensive picture of how the crisis has impacted the nation’s financial resilience. We know that people’s opportunities to spend have been curtailed whilst many who have been working remotely have found a reduction in their outgoings. This has resulted in additional savings of £190bn over the last 16 months.
“However, whilst Yorkshire and the Humber’s household savings rate may have increased from 3% in 2019 to 6% in 2020, there are still pockets of society who have been more significantly impacted than others, and therefore are more likely to be in need of financial support and education on how to improve their financial situation.
“In some regions and cities, the increase in financial resilience may have been caused by tougher, longer Covid restrictions being in place, meaning people in those areas were able to save more. However, this theory isn’t necessarily reflective across all regions, as Yorkshire and the Humber faced tough restrictions throughout 2020 yet saw a decline in resilience. Interestingly, the region ranked fourth highest for financial health, however performed the worst for planning for difficulty.
“As the economy gets back on its feet, its essential that we remember that many people have been made more financially vulnerable by the impacts of the pandemic, and as a Society we are here to help them in their time of need.”
On a regional level, the East of England proved to be the most financially resilient region, scoring 61 out of 100. Yorkshire and the Humber came second to last in the financial resilience rankings, scoring 40.
When looking at the UK’s biggest cities, Edinburgh ranked as the UK’s most financially resilient, scoring 64, out of a possible 100. Whilst Leeds scored 53, making it the 8th most resilient city. However, Leeds has suffered through the pandemic, falling from 5th place in 2019 to 8th.This story was also replicated in Sheffield, which despite growing levels of resilience in 2014-2019, suffered significantly throughout the pandemic, resulting in a fall from 2nd place in 2019 to 7th place in 2020.
Yorkshire Building Society has a range of support tools available to help people build their financial resilience and take practical steps to saving more. To find out more, please visit hub.https://www.ybs.co.uk/money-mot/index.html