The purchasing power in the UK has dropped by 41% over the last 20 years. Today, £100,000 left in a bank account since2004 without being invested would now be worth £59,021.
This figure is one of the findings from a study conducted by Tickmill, an international online trading broker that compared the economic situation in the UK and the European Union through the infographic “Purchasing Power and Cost of Living: UK vs EU”.
The analysis reveals a slight decline of 0.4% in the UK’spurchasing power, which currently stands at £41,573. In contrast, the European Union has seen a modest rise of 0.1%, reaching £40,874.
Why is purchasing power declining in the UK? One key factoris the cost of living. If the UK were still part of the EuropeanUnion, it would rank as the fifth most expensive country, behind Ireland, Luxembourg, Denmark, and the Netherlands.
Unsurprisingly, 3 in 10 Britons are struggling with the cost of living. Women (3 in 10, compared to 25% of men), those agedbetween 35 and 49 (4 in 10), households earning less than£15,000 (6 in 10), and single parents (1 in 2) are among the most affected groups.
Among UK nations, Northern Ireland is the hardest hit, with 34% of its population facing financial difficulties, followed by Wales (31%), England (28%), and Scotland (22%). In England, the North East has the highest percentage of people struggling, with 4 in 10 residents affected. Even in London, the high costs impact 1 in 4 adults.
In response to these challenges, Britons are making significant adjustments:
The British also made changes on the financial side. One in four adults has been forced to dip into their savings or investments to cover daily expenses. Moreover, 44% havestopped saving or investing entirely or have reduced theirsavings and investments—a 4% increase compared to 2023.
The lack of investment is another critical factor contributingto the decline in purchasing power. It is estimated that 13 million UK residents hold £430 billion in cash deposits but do not invest. The reasons? Seventy-four percent say they cannotcompare investment products effectively, and 43% are afraidof losing their money.
A lack of knowledge and fear are preventing many savers from taking advantage of an important opportunity: preserving or increasing their purchasing power in the long term.
