Age gulf opens up in UK consumers’ disposable incomes

01 Mar 2024

Early 2024 is seeing a huge gulf open up in the disposable income growth of younger families and older households as the impact of higher interest rates and tax payments makes itself felt, according a new report from independent consultancy ConsumerCast, UK Consumer Spending Outlook 2024.

Younger households, headed by adults in their 30s and 40s, are under the most pressure, with income after interest payments (principally on mortgages), taxes and national insurance falling by 0.9% in February against the same month last year, and forecast to remain flat on the same basis in March. These households pay two thirds of all mortgage interest and the fall in disposable income puts these younger consumers at the heart of a “flash crash” in living standards at the start of 2024. They are forecast to slump from 38% of net incomes in 2019 to 33% in 2024. This is at the heart of the current stagnation in retail sales and in other areas of consumer spending like hospitality.

At the same time, 65+ predominantly pensioner households, are set to see incomes grow by 6.4% and 6.8% in the same months as income from investments including interest rises and pensions are uprated in line with inflation, rising by nearly 20% in two years. Their share of net income will jump from 22% five year ago to 26% this year.

Retailers and brands need to find new ways of addressing and serving older customers if they are to make the most of the opportunities presented by this gulf in disposable income growth, particularly in encouraging them to spend on their homes and personal goods rather than simply saving more.

For more information and commentary please contact Robert Carruthers, Director of ConsumerCast (07980 860301).