What will your finances look like in 2030? If you’re anything like me, you’ll probably find it hard to imagine one year in advance, never mind 17. Yet, we’ve been looking into the future – what will the economy look like?
While looking at economic trends has been a mainstay of business and government for years, consumers’ individual finances are often left out of the picture. Our new ‘Consumers in 2030’ report uses economic modelling and trend forecasting to think about what consumers are going to need from Which? in the year 2030.
The UK economy in 2030
The results paint a pretty gloomy picture. By 2030 we still won’t have escaped the clutches of the present recession, which means the UK’s economy will have endured the weakest recovery from a depression since the 1920s.
Our finances will be characterised by low annual income growth and high commodity prices. Wages will be kept down by high residual unemployment, and the cost of commodities will be driven up by competition from three million new members of the global middle class.
As a child of the booming 90s and early 00s, I find it hard to imagine the impact that sharply rising commodity prices will have on my quality of life.
The idea that rising food, utilities, and housing prices will mean that I spend over 65% of my income in 2030 on essential goods seems hard to fathom. That’s a higher proportion than it was in 1964, when comparable records began. Never mind missing out on my daily soya latte – how will I ever afford a house? And if I were to get a house, how will I afford childcare?
Financial innovations in 2030
While it’s easy to get depressed when looking at the numbers, I don’t think it needs to be all doom and gloom. After all, human ingenuity is hard to account for in economic predictions, and in a networked society there’s enormous potential for online platforms to foster innovation.
As a member of the ‘millennial’ generation, I’m the kind of person who is happy to manage my life (and my finances) collectively and online. It makes sense to me that alternative and collective lending schemes will become increasingly popular
The big idea likely to gain in popularity over the 21st century (and potentially to solve some of my problems) is the collective home purchasing scheme. With high rents and prices making it increasingly hard to save, a scheme that allows online ‘teams’ of home-buyers to take out low-interest loans and support one another to make repayments, will be an attractive solution.
The idea is that these schemes would provide a collaborative route to home ownership for people who aren’t eligible for a traditional mortgage. For example, groups of young people would be able to use the scheme to pool their resources and support each other to make regular mortgage repayments, despite the challenging employment market.
On the other hand, these alternative financial schemes raise new questions for consumers and organisations like us here at Which?. For example, what new forms of regulation might be needed to give customers assurance in peer-to-peer lending? How will online investors ensure that the data that enables them to assess potential borrower’s credit worthiness is reliable? How will the development of alternative banking models impact on the services offered by traditional banks?
Our Consumers in 2030 report sees us sharing our ideas about the key challenges and opportunities consumers will be facing in 2030. But what do you think the world will be like?