Financial wellbeing with Steve Herbert

Let’s start at the beginning

In early October 2022, Steve Herbert, Wellbeing & Benefits Director for Partners& spoke to an audience of Surrey & Sussex HR Forum members about the UK’s economic outlook, and what that might mean for the financial well-being of their workforce.

Unprecedented timing

This particular presentation delivery was an extremely challenging one.  The (now infamous) “Mini-Budget” of an embryonic Truss/Kwarteng administration had taken place three weeks previously, and Steve was speaking just four days after the sacking of Chancellor Kwarteng, and three days before the resignation of Prime Minister Truss after just 49 days in office.

The economic damage

Estimates of the damage done to the national economy during those seven weeks vary from £30bn to £60bn.  Yet regardless of cost, this short-lived experiment did little to improve the UK’s international image for economic competence across the globe.

In short, Steve’s presentation was delivered in turbulent, and deeply uncertain, times.

Employees with financial troubles infographic

So what has changed since then?

A new Chancellor, closely followed by a new Prime Minister, has done much to steady the good ship Britannia, and it is now perhaps a little easier to predict the trajectory of the national economy, and what that might mean for the financial well-being of your employees in the months ahead.

How forecasts can create the outcome

Virtually all economic forecasts – regardless of how robust the methodology and data used might be – are ultimately wrong.  Partially this is because it’s impossible to consistently predict the future accurately.  For instance, Brexit, Covid19, and Russia/Ukraine would each have seemed a remote possibility only a few years ago, let alone all three occurring in concert.

But forecasts themselves also change the outcomes experienced.  The prediction of (say) a recession results in consumers, businesses, trade bodies, regulators, and even governments changing their behaviours and/or taking mitigating actions.  So ultimately the output of a forecast unwittingly becomes an input to the outcome.

Reality and indicators

Yet forecasting remains a useful – if rather blunt – tool, and allows employers to make and take decisions based on the available evidence (and the last few months have provided plenty of useful economic indicators to consider).

Let’s start with what was (hopefully) the nadir of forecasts for the UK:

In late January the International Monetary Fund (IMF) suggested that the UK economy would shrink by 0.6% in 2023, more than any other nation in the G20, and that includes Russia, a nation facing massive economic sanctions as a result of their invasion of Ukraine.

Yet, from the low base of that gloomy IMF forecast, there have been a series of somewhat improved economic announcements.

The Bank of England changed their forecasts from a potential two-year recession (predicted as recently as November 2022) to a prediction of a one-year downturn in February.

The Office for National Statistics (ONS) then suggested that the UK avoided a technical recession in 2022 (albeit by the narrowest of margins), and the latest ONS figures show the UK economy flatlining rather than actively getting smaller.

And whilst interest rates (and associated borrowing costs for those with credit card debt and mortgages) have continued to rise, we may now be nearing the peak of those increases.

The above represents a series of small – but significant – improvements to the UK’s economic position.  Admittedly it’s a case of a glass half-full rather than a glass half-empty, but a little optimism is welcome after the last few months!


But what about inflation?…(something that has dominated the national headlines for the last eighteen months).  The headline rate of inflation is the Consumer Prices Index (CPI) measured over 12 months.  The energy price spike, experienced at the start of the Russia/ Ukraine war, is now over a year old, so that spike in costs will soon drop out of the annual CPI figures.  This is why inflation is expected to rapidly drop in the UK as it recently has in the United States.

This is undeniably good news – yet it would be a mistake to think that a reduction in CPI means a reduction in the prices of retail goods.  CPI of, say, 6%, is better than 10%, but still means prices are rising at 6% a year.  So, we are now entering a period of disinflation, where prices continue to rise, just at a slower pace than seen in 2022.

And although energy prices are currently expected to drop sharply in July, those prices are still likely to be around twice the level seen in April 2021.  And government support towards energy costs ceased for most employees in March this year, so these costs will now have to be met in full by households.

Increasing household costs

It’s also worth noting that 1 April 2023 was also the trigger point for another significant round of cost increases for households and your employees.  Council tax, water bills, mobile phone, and broadband costs are all increasing – sometimes significantly.

Last – but certainly not least – many employees will face hugely increased mortgage bills if their current fixed-rate deal expires in 2023.  According to this BBC news item, an average two-year fixed deal was 2.29% in November 2021, and is now 5.32%.  This represents a potential difference of hundreds of pounds each month in repayments for a typical borrower.

The outlook and your employees

So where does that leave us?

Thanks to a combination of factors the overall economic outlook for the nation looks better than it has for some time.  This is very welcome.

Yet the reality is that the cost-of-living and cost-of-borrowing pressures on your employees won’t be easing – and may be getting a little worse – throughout much of 2023.

What effect may this have on your employees?

This matters, not least because a financially stressed employee is likely to be less engaged and productive than their employer would ideally like them to be.

It is also the case that poor financial well-being can be a contributory factor to poor mental and/or physical well-being too in your workforce.

Another important issue for employers to consider is that employees with financial concerns are (of course) more likely to look elsewhere for employment and higher remuneration.  This represents yet another employment headwind given the continuing shortage of candidates in some UK employment sectors.

What can I do to help?

It is highly evident from the points above that it is very much in the employer’s interest to continue to do all they can to support workers and their families towards improved financial well-being through the cost-of-living crisis and beyond.

As outlined in Steve’s previous seminar, there are a number of simple and practical measures that employers can implement to help improve their employees’ financial well-being and these can be found here.

How can I keep informed?

You can follow Steve Herbert’s thoughts on the economy, HR issues, and employee benefits via his LinkedIn profile or contact him directly.  Additionally, head to Partners& for more information on how your business can effectively support the wellbeing of your employees.

Additionally, you may like to apply for free membership of the The Surrey & Sussex HR Forum, where, as an HR professional, you can attend free seminars throughout the year that address the most pressing challenges that the industry is facing.

How The Recruitment Consultancy can help

The Recruitment Consultancy has developed an excellent reputation for assisting all organisations across a variety of industries. From providing advice to facilitating the recruitment process, our experienced team of specialists are on hand to help.

Whether you’re actively looking for permanent and contract or temporary recruitment solutions, or you’re wanting advice on salary-benchmarking and other employee/talent acquisition queries, get in touch with The Recruitment Consultancy and we will be very happy to share our knowledge and expertise in these areas.