From a pandemic to a cost of living crisis. Associations between financial wellbeing, financial uncertainty and mental health in contemporary Britain

BackgroundThe study tests whether financial hardship and uncertainty have increased during the COVID-19 pandemic and the early stage of the subsequent cost-of-living crisis and whether these might explain increased psychological distress among the UK population. MethodsWe derive two cohorts from Understanding Society, a study representative of the UK population. Cohort 1 (C1) starts in 2016 and includes a 3-year follow-up until 2019. Cohort 2 (C2) starts in 2019 and ends in 2022. We provide descriptive statistics on financial hardship and uncertainty and apply parallel Latent Growth Modelling (LGM) on each cohort to explain variations in psychological distress (GHQ-36) based on baseline and follow-up financial trajectories. The sample is adjusted using cross-sectional weights and inverse probability weights for attrition. ResultsFinancial hardship rates do not differ across cohorts but a marginal increase of 10 percent in financial uncertainty is observed in 2022 for C2. No significant difference in associations is observed across cohorts in the LGM with constant financial hardship increasing the GHQ-36 slope by 0.89 (95%CI=0.76;1.02) and 0.89 (95%CI=0.73;1.05) units in C1 and C2 and constant financial uncertainty increasing it respectively by 0.95 (95%CI=0.74;1.17) and 1.04 (95%CI=0.82;1.25). Baseline hardship and uncertainty increase the intercept by 2.39 (95%CI=2.11;2.67) and 1.74 (195%CI=1.38;2.10) in C1 and 2.97 (95%CI=2.65;3.29) and 2.12 (95%CI=1.75;2.49) in C2. DiscussionThe uncertainty caused by the 2022 cost-of-living crisis might have contributed to increase psychological distress within the UK population. Stronger detrimental effects might be expected if financial hardship were to increase.