A week on from the government’s Mini Budget, and many individuals and employers are still working through the ramifications and exactly what it means for them.
The challenges many households are currently facing due to the cost-of-living crisis are well documented. However, with interest rates now expected to rise following the announcement of Chancellor Kwasi Kwarteng’s tax-cutting measures, many now also face additional financial pressures from rising mortgage payments.
If the Bank of England, as indicated, does raise interest rates at its next meeting in November, this will increase the cost of borrowing for financial institutions offering mortgage products. Consequently, a large number of lenders are withdrawing mortgage products to reprice them ahead of the expected rise. This could pose a significant challenge for those on variable rate mortgages, those whose fixed-rate mortgage term is due to expire or for first-time buyers.
This will, understandably, result in a great deal of anxiety and stress for those affected, particularly where increases mean repayments are no longer affordable.
Employers may, therefore, notice much higher numbers of employees experiencing anxiety and stress relating to financial pressures in the coming months. This could result in their becoming withdrawn and disengaged, lower levels of productivity, and higher levels of absence, particularly in cases where financial stress and a decline in mental wellbeing manifest in physical symptoms. With some individuals having to take on additional work in order to cover necessary household costs, employers should also watch for any detrimental effect this may have on their health.
The challenge will be how best to support employees as they navigate through an increasingly difficult financial landscape. Many organisations have already increased salaries, or awarded cost-of-living bonuses, so what else could they consider?
One option could be to provide access to mortgage advisers or independent financial advisers, who may be able to help employees to reorganise their finances, provide debt advice or present available options.
Of course, this will only go so far if an individual does not have enough to cover even basic monthly bills. Facilitating access to mental wellbeing support, therefore, is also crucial.
Supporting employees through the cost-of-living crisis is one of the topics that will be covered at next week’s Employee Benefits Live, which will take place at Excel, London, on 5 and 6 October. Speakers from leading employers, including Ipsos and Claranet, will discuss how to help with the rising cost of living, and how to help employees feel they are in control of their money in the current financial climate.
Tickets for Employee Benefits Live 2022 are free, but delegates must register in advance. See the full conference agenda or register to attend.
I look forward to seeing many of you there!