Understanding Scotland – Economy May 2022

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We are delighted to present this Understanding Scotland report exploring how the Scottish population feel about

the economy and the ongoing cost of living crisis.

We capture people’s recent experiences and current expectations regarding the economy and personal finance, and the extent to which they are satisfied with their incomes, as well as their response to rising prices.

We find that most people are feeling markedly worse off and are pessimistic about the economic and financial outlook, with evident concern over rising prices. People’s money is not going as far as it used to, and even those in paid employment are struggling to keep pace with inflation. It is those in more vulnerable positions and more deprived communities, however, that find themselves hardest hit by the ongoing crisis.

There is widespread and acute anxiety over surging prices, which have pushed people to take on debt and forego basic essentials such as heating and food, and a quarter of adults are losing sleep.

While the outlook is stark across all parts of society, it is hoped that this report will help to identify those most impacted by rising prices and most urgently in need of support.

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 cost of living crisis tops people’s concerns
    Two thirds of people deem this a top economic priority. Other prominent concerns centred on wages, living standards and poverty. Such considerations are also in the ascendancy, while economic growth and public finances have slipped down the agenda.
  2. A clear majority judge economic conditions and their own financial circumstances to have worsened
    84% of people believe that economic conditions are worse now than over the past 12 months, and 62% say the same of their own finances, compared to only 8% saying that they have improved.
  3. And they expect things to get worse before they get better
    4 in 5 people expect economic conditions to deteriorate further over the next year, and 3 in 5 expect their own circumstances to worsen. Of those who already feel worse off, 78% expect things to get even worse over the coming year.
  4. The cost of living crisis hasn’t hit everyone equally
    Surging prices have exacerbated existing inequalities, with 23% of those in the most deprived neighbourhoods saying that their personal finances are in a ‘much worse’ state (compared to 13% in the most affluent areas). Three quarters of those unable to work due to sickness or disability, and four fifths of the unemployed also report feeling worse off.
  5. Most people say that their money doesn’t go far enough
    Over half (55%) of people overall, and 61% of C2DE respondents, are dissatisfied  with the extent to which their income covers their living costs. This figure is up 18 percentage points compared to September of last year. An outright majority of people in all forms of paid employment were also dissatisfied with this.
  6. Parents and larger households, especially, are struggling to keep pace with rising prices
    Two thirds of households with children report feeling worse off now than over the past year, and 3 in 5 households with 3 or more people say that their incomes do not satisfactorily cover their living costs.
  7. Rising prices are causing acute stress, with a quarter of people losing sleep over the cost of living
    23% of people have lost sleep over financial stress and anxiety, rising to 26% of parents and 28% of people in the most deprived areas. This rises further, to half of those unable to work due to a long-term sickness or disability.
  8. Higher prices are pushing people towards riskier financial behaviours and into more vulnerable positions
    A third of people have had to dip into their savings, leaving them more exposed to financial shocks. In parallel, over a quarter of people have taken on debt to cover higher prices. 13% of the overall population, and just under a fifth (17%) of those in the most derived neighbourhoods, have done both.
  9. And people are foregoing basic needs in order to get by
    3 in 5 people have foregone heating in order to reduce spending, and a further 22% have skipped or cut down on meals, in addition to the 70% of people cutting down on non-essential purchases and leisure activities.
  10. People who cannot work due to a sickness or disability are being hit especially hard by the crisis
    Among this group, half have lost sleep over the cost of living crisis, and a worrying 14% have had to use a foodbank. Three quarters of this group judge their finances to be worse off now than over the past year, and a third deem them ‘much worse’.