Investment levels among Scottish households fall to their lowest rate for nearly three years as living costs soar

Scottish Friendly’s latest Investor Index reveals new policy sales in Scotland dropped to their lowest since Q3 2019

New data from financial mutual Scottish Friendly reveals investment activity in Scotland fell to its lowest level in nearly three years during the second quarter of 2022.

The Scottish Friendly Investor Index tracks sales of adult investment ISA policies and the total value of these new policies among its UK-wide customer base, with quarterly activity measured against a base rate of 100.

In Scotland, the number of new policies opened in Q2 fell by 3% on the previous quarter to reach the lowest level since Q3 2019.

Sales of investment ISA policies in Scotland peaked in Q4 2020 and remained high for much of 2021.

However, they have began falling in recent quarters along with the value of newly opened policies. The amount invested in new policies in Q2 2022 fell 5% on the previous quarter and is down 26% from its high in Q3 2021.

Across the UK, there is a sharp contrast between the value of new policies opened by men and women.

Over the past three months, the value of new policies among female customers remains well above pre-pandemic levels – up 22% on Q4 2019.

In contrast, new policy values among male customers were 4% lower in Q2 2022 than in the final three months of 2019.

Regionally, the East Midlands has seen the biggest decline in the value of new policies, down 14% on the previous quarter.

Meanwhile, the amount being invested by Scottish parents into new Junior ISA (JISA) policies is up marginally by 1% on Q1 2022. Most other parts of the UK have seen a decline, with the greatest drop off in the West Midlands and East of England where the value of new JISA policies has decreased by 21%.

Kevin Brown, savings specialist at Scottish Friendly, comments:

Household budgets in Scotland are under increasing pressure as living costs continue to rise and this is restricting families’ ability to save and invest.

New policy sales have returned to pre-pandemic levels and with inflation yet to reach its peak we expect household saving to remain depressed for some time.

Inflationary pressures seem to be impacting women’s capacity to save far less than men at this time, with the amount invested in new policies by female customers remaining well above-pre pandemic levels.

Despite this contrast, overall there are very clear signs that many households are having difficulty in finding enough disposable income to maintain regular saving and investment habits.

As incomes are squeezed, it is important people have easy access to their spare cash, but if families are still saving for the long-term then it’s crucial that they try to protect their wealth from the devaluing effects of inflation.