Scottish Friendly Disposable Income Index reveals year-on-year fall in monthly disposable income of 0.4 percentage points

Press release 30th November 2015

  • Year-on-year fall in monthly disposable income from £278 to £237
  • This equates to 10.1 percent of take home salary
  • Despite this, the last quarter saw a slight rise in the proportion of disposable income of 0.4 percentage points
  • Number of people saving money fell in the last quarter by 6 per cent
  • Equates to 24 million people not being able to regularly save at all

The latest Disposable Income Index[1] (DII) published today by savings and ISA provider Scottish Friendly has highlighted a 0.4 percentage point year-on-year fall in the UK’s disposable income. The quarterly report, which looks at saving and spending habits across the UK, has revealed that after bills and essentials have been paid, people are currently left with around 10.1 per cent of their salary in spending money, an average of £237 per person. This compares to £240 last quarter and £278 this time last year[2].

The survey also showed a 6 per cent fall in the number of people putting aside money monthly. This equates to a drop of 1.8 million Britons saving to 25.7 million, meaning a staggering 24 million Britons being left in a position of not saving regularly at all.

On the other hand, the number of 18-24 year olds putting money away has actually risen by 5 per cent over the same period.

Interestingly, while the number of people investing in to ISAs fell over the last quarter, (cash ISAs fell by 5 per cent and stocks and shares ISAs fell by 9 per cent) the amount of money being put into these products overall increased (cash ISAs increased by 101.1 percent and stocks and shares ISAs increased by 43 per cent). On average £291 is being invested monthly into stocks and shares ISAs and £355 being invested into cash ISAs.

Regionally over the last year most of the UK has seen a fall in disposable incomes, with the North West seeing the biggest fall of 1.7 percentage points (£225 per month), closely followed by the North East (£204 per month) and South East (£214 per month) which both saw a 1.1 percentage point fall. Scotland saw the biggest rise year on year with an increase of 1.1 percentage points of disposable income with Scots having £269 left over each month. (Please see the table below for a full regional breakdown.)

Over the last three months, Northern Ireland saw the biggest rise in disposable income with a 1.9 percentage point rise, yet their disposable income still remains the lowest in the UK.

Calum Bennie, savings expert at Scottish Friendly, said:
"It’s never welcome news when people’s disposable income falls and it’s an especially unwelcome development in the run up to Christmas.

"While it’s worrying that the number of savers seems to be on the decline, it is encouraging to see that those who are able to save are putting away more money. It seems likely that we are set for at least a further year of dismally low interest rates. Therefore it is increasingly important that those preparing for their future seriously consider stocks and shares ISAs as a potentially higher return alternative to cash deposits.

"It must also be noted that it’s not all bad news. It’s heartening to see such a high percentage of youngsters saving for their future. Leaving education during a period of economic turmoil and austerity seems to have had an impact on the mind-set of young people and they seem determined to save for the future rather than just spend it."

Quarterly change in levels of disposable income by region:

Region of the UK

Per cent of salary attributed to disposable income – Q3 2015

Per cent of salary attributed to disposable income – Q4 2015

Percentage point difference

Average disposable income Q4 2015

NATIONAL

9.7 per cent

10.1 per cent

+0.4 per cent

£237

Northern Ireland

6.6 per cent

8.5 per cent

+1.9 per cent

£174

London

9.5 per cent

10.8 per cent

+1.3 per cent

£328

North West

9.0 per cent

10.1 per cent

+1.1 per cent

£225

Scotland

10.8 per cent

11.9 per cent

+1.1 per cent

£269

Yorkshire & Humberside

9.8 per cent

10.7 per cent

+0.9 per cent

£236

North East

9.2 per cent

9.5 per cent

+0.3 per cent

£204

Wales

9.6 per cent

9.8 per cent

+0.2 per cent

£227

West Midlands

9.2 per cent

9.0 per cent

-0.2 per cent

£203

South East

9.6 per cent

8.8 per cent

-0.8 per cent

£214

East Midlands

11.8 per cent

10.9 per cent

-0.9 per cent

£225

South West

11.3 per cent

10.3 per cent

-1.0 per cent

£255

Annual change in levels of disposable income by region:

Region of the UK

Per cent of salary attributed to disposable income – Q4 2014

Per cent of salary attributed to disposable income – Q4 2015

Percentage point difference

NATIONAL

10.5 per cent

10.1 per cent

-0.4 per cent

Scotland

10.8 per cent

11.9 per cent

+1.1 per cent

South West

9.7 per cent

10.3 per cent

+0.6 per cent

London

10.4 per cent

10.8 per cent

+0.4 per cent

Yorkshire & Humberside

10.5 per cent

10.7 per cent

+0.2 per cent

Northern Ireland

8.6 per cent

8.5 per cent

-0.1 per cent

Wales

10.2 per cent

9.8 per cent

-0.4 per cent

East Midlands

11.3 per cent

10.9 per cent

-0.4 per cent

West Midlands

10.0 per cent

9.0 per cent

-1.0 per cent

North East

10.6 per cent

9.5 per cent

-1.1 per cent

South East

9.9 per cent

8.8 per cent

-1.1 per cent

North West

11.8 per cent

10.1 per cent

-1.7 per cent

References:

  1. Research conducted by RedDot Research. A representative cross section of over 2,000 adults in the UK were surveyed.
  2. From Scottish Friendly Disposable Income Index research published August 2015 and November 2014

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