Understanding Scotland – Economy August 2022

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This   issue   of   Understanding   Scotland:   Economy   presents   some extremely sobering findings. Concern at the rapidly rising cost of living is high and widespread, and the economic outlook is daunting.

A   clear   majority   have   seen   their   finances   and   wider   economic conditions  deteriorate,  and  there  is  little  hope  that  these  will  improve over  the  next  year.  The  cost  of  living  ‘crisis’  is  increasingly  seen  as  a long-term  phenomenon,  with  a  near-universal  acknowledgement  that the worst is yet to come, and that its effects will be felt for a number of years yet.

People  have  made  great  efforts  to  cut  their  outgoings,  including  by foregoing  basic  necessities  like  food,  and  many  have  taken  on  a combination  of  debt  and/or  extra  work.  With  many  dipping  into  their savings, people have less and less to fall back on, all while the economy slides ever closer to recession. Cuts to spending across the board make this look increasingly likely, and there is a broad consensus that this is inevitable.

Despite their best efforts, people need more help, with the support on offer   from   UK,   Scottish   and   Local   Government   widely   seen   as inadequate. There is especial antipathy for utilities companies, seen not only  to  have  failed  to  rise  to  this  challenge,  but  also  held  largely responsible for rising prices in the pursuit of higher profits.

This  issue  explores  these  and  other  questions,  in  a  special  deep-dive into  the  rising  cost  of  living:  how  people  are  feeling  about  it,  what they’ve been doing to get through it, and where extra help is needed.

Key Takeaways

This edition of Understanding Scotland brings you insights from over 2,000 members of the adult (16+) Scottish public on the most important aspects of our society and economy.

  1. The economic outlook is bleak and things are heading in the wrong direction
    Half of people overall, and 58% of those expressing an opinion, think that things in Scotland are heading in the wrong direction, against only a third who say the opposite. 81% of people think that economic conditions will get worse over the coming year – 44% that they will get ‘much worse’ – and 87% of people believe the cost of living crisis will prompt a recession.
  2. People think the cost of living crisis is here to stay and that the worst is yet to come
    Over nine in ten people believe that things will get worse before they get better, and 94% think that the effects will continue to be felt for a number of years.
  3. People are struggling to make ends meet, no matter what they try
    Three in five people report that their income does not satisfactorily cover their costs of living, up sharply from 38% last September, and two thirds of those who have cut down on non-essential purchases still say this. This comes despite widespread and concerted efforts to cut spending and take on more work: 80% have cut down on non-essentials and leisure, 15% have taken on more hours, and a further 9% have tried to do so unsuccessfully.
  4. Rising prices are depriving people of basic necessities and causing considerable stress
    A large number of people are going without basic essentials, with 27% of people skipping or cutting down on meals to save money. 28% of people, up three points since May, have lost sleep due to financial anxiety, rising to two in five young people, over a third of households with children, and more than half of those who are unemployed or unable to work.
  5. Inflation is pushing people into financial vulnerability and risky behaviours
    Two in five people have taken money out of their savings to cover rising prices, leaving them with less to fall back on. 35% of people have taken on debt and/or borrowed money, rising to 44% in the most deprived areas, while one in five people overall have done so at the same time as depleting their savings.
  6. Soaring prices are exacerbating inequalities
    61% of people report that they feel worse off now than over the past year, rising to 73% of people in the most deprived fifth of neighbourhoods. 83% of people saying that their finances have worsened over the past year expect to be worse off still over the coming year.
  7. Support for households thus far has been inadequate
    89% and 73% of people say the UK and Scottish Governments, respectively, have not done enough to help people cope with rising prices. Two thirds say the UK Government has done ‘far too little’ and two in five say the same of the Scottish Government.
  8. There is especial antipathy towards energy companies
    95% of people say energy companies have done too little to help people out, and 81% that they have done far too little. Furthermore, a fifth of people (20%) think the single biggest cause of rising prices is companies wanting to increase their profits, only just behind the war in Ukraine at 21%, and ahead of pandemic-related supply chain issues at 12%.
  9. People think pay-rises should match inflation, but making this happen is another matter
    While 80% of people believe that salaries and wages should rise in line with inflation, only a third say they would feel comfortable asking their employer for a pay rise and far fewer – less than 7% – have actually done so. Female respondents, younger people and those in part-time work were among the least comfortable doing so.
  10. The ‘wage-price spiral’ argument doesn’t fly with the public
    Only 4% of people deemed rising wages the top driver of inflation, and only one in five included this among the top three factors. Only 8% of people believe that pay should not rise in line with inflation, a tenth of the proportion that said it should.