The cost-of-living crisis: a vicious cycle for our mental health

NatCen's latest Society Watch report reveals the effects of the cost-of-living crisis on people's mental health
Man in a dark room looking worried, putting his hand to his temple

The cost-of-living crisis has been a present and impacting issue for a number of people since the end of the recent pandemic. The cause of the crisis is not one specific issue; the crisis has been created and exacerbated by a number of social, economic, and political issues in and outside of the UK. As NatCen’s recent Society Watch report captures, the complexity of these external factors has resulted in complex interwoven issues for differing groups of people. A primary impact of the cost-of-living crisis has been on people’s immediate financial decisions but, an important issue that has only been worsened by the pandemic, is people’s mental health. The research that underpins Society Watch pulls together a broader understanding on how mental health is being affected, what are people most worried about, and what this all means for general life satisfaction.

The ONS have reported that over a third of their research participants believe the cost-of-living crisis has had a negative impact on their mental health, with the greatest negative affect being observed in younger people from the most deprived areas in England. Research by NatCen further confirms this, finding that since before the pandemic, those aged below 50 saw the largest increase in the proportion of those feeling dissatisfied with their life and a 15% increase in dissatisfaction among those who are ‘finding it very difficult’ to manage financially. Trends from 2018 to 2023 show a small increase in the consistently high levels of worry regarding money or debt but levels of worry regarding mental health and work-life balance rose significantly in 2022 and beyond.

The concerns regarding mental health since the onset of the cost-of-living crisis are not only being reported by the public. Nearly three quarters of NHS providers said they were seeing an increase in patients seeking help for mental health problems related to debt and poverty. Research has also shown the longer-term impacts of poverty related to poor mental health, demonstrating how it is associated with several adverse mental health outcomes, introducing increased difficulty for people to manage, and overcome their financial and health issues.

Financial and poverty related mental health issues are not an isolated problem, like many other issues the crisis has caused or worsened, they often lie at an intersection of factors such as housing and physical health. Analysis by The Health Foundation have noted associations discovered in the Millennium Cohort Study between poor mental health and frequently moving house, potentially adding to the difficulty in finding stability in their lives. Research by the BRE has shown that housing related mental health issues, made worse by the pandemic, is contributing to an estimated cost of £1.4 billion to the NHS. Furthermore, the Financial Lives Survey demonstrated that 28% of participants were losing sleep due to the current state of their mental health, negatively impacting their physical health too.

An additional challenge is the cyclic nature of the factors that cause mental health issues; poor mental health tends to worsen factors such as financial circumstance, physical health, and housing. There is also evidence that people struggling with their mental health also struggle with their finances, not being able to reach out for support or not managing money efficiently. Unfortunately, financial and health issues caused by poor mental health are likely to lead to a worsening state, making it even harder for people to improve many aspects of their lives.

The wealth of research used and discussed in Society Watch shows that a lot is being done to understand the impact of the crisis and the needs of those most affected. Historically, we know that the impact of periods of economic and social instability last for years to come, and often some of the biggest effects don’t come to light until years down the line. Problems may initially seem financial, but they can spread to impact the mental health and stability of those already disadvantaged.