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From pension plans to retirement savings, new data has revealed the ‘financial resilience capitals’ of the UK lie in London commuter towns. Hargreaves Lansdown head of money Susannah Streeter talks us through the findings in today’s Notebook
London commuter towns come out on top
By this stage in January, some of our resolutions may already have been broken. The dry spell might have turned a little moister than planned, with the pub beckoning on long winter nights. Gym trips may now be fewer and further between, as social lives rev up again and sweaty spinning classes lose their appeal. But there’s some stark data out this week showing how important it is to keep working on our finances.
The latest Hargreaves Lansdown (HL) Savings and Resilience Barometer paints a bleak picture of the nation’s preparedness for retirement. There has been a drop in the proportion of householders achieving adequate pension savings across all income levels, as the value of a pot required for a moderate retirement has increased 40 per cent since 2019. Five London boroughs are near the bottom of the pile when it comes to the pensions gap with only 24 per cent of people on track for a moderate retirement income.
When it comes to overall financial resilience there’s a divide opening up across the country. London commuter towns – Wokingham in Berkshire and Elmbridge in Surrey – are the resilience capitals of the UK. Higher incomes in these areas mean that on average people are left with £361 at the end of the month, £165 higher than the national average. Hull in Yorkshire has the lowest financial resilience in the country, where predominantly lower income households have an average of £65 left at the end of the month.
London’s home ownership league table
The HL Barometer doesn’t just measure incomes and savings when assessing resilience, but levels of home ownership too, and it shines a light on the repercussions of unaffordable housing. The combination of rising house prices, high interest rates and the ratcheting up of rents is a major issue, because it means fewer people are able to buy a home and build their resilience for the longer term. While commuter towns in the home counties are sitting pretty, London dominates the list of areas with low levels of home ownership and has five boroughs scoring 25 per cent or less for the amount of property equity they hold. The lowest overall resilience in London is Westminster, followed by Tower Hamlets and Hackney.
January splurges
We all know we should have a rainy day fund, but it can be so tempting to eat into savings when January sales beckon, we’re bombarded with ads for a trip to sun-drenched beaches or the Christmas bills are rolling in. London appears to be setting a good example here, given that it’s home to every one of the top 10 boroughs where most people have enough emergency savings. While higher incomes and responsible attitudes may account for this, it could also be the result of the property trap. Younger Londoners may have built up a chunky deposit, but climbing house prices and stubbornly high mortgage rates means they still can’t afford to buy.
Interest rate cuts eyed
There could be some relief in sight for wannabe homeowners, with financial markets placing more bets on an interest rate cut in February. The surprise fall in inflation combined with the stagnating economy and falling retail sales have increased the chances that policymakers will vote for another 0.25 per cent reduction. But we may not necessarily see an immediate fall in fixed mortgage rates. Looking further ahead, the inflationary picture is unclear as Trump’s tariffs are set to take effect, while retail prices could rise as firms pass on higher National Insurance costs. A cut next month will also be a signal that the Bank of England is concerned about the UK’s growth prospects, which could put fresh pressure on Chancellor Rachel Reeves.
Quote of the week
Our ambition is not just to be an AI superpower but also to make sure it benefits working people.
Prime Minister Keir Starmer
Going for growth? Don’t forget about retail
The government is rooting around for more growth levers to pull – from reducing strict lending rules to increasing super-computing capacity to make the UK an AI superpower. Amid the cranking up of the UK’s potential, it’s important not to ignore the quiet power of the retail investor. UK retailers are already enthusiastic holders of UK equities but are often left out when it comes to new listings and their financial clout shouldn’t be ignored in future IPOs. Of course, for many people finding the money to invest in companies in the first place is the challenge. So, it’s back to those financial resolutions. I’ve saved money by buying a stack of Christmas presents in the January sales and am vowing to only buy clothes on Vinted. Over to you.’
Susannah Streeter is head of money and markets at Hargreaves Lansdown
