Savers, pensioners, drivers, borrowers: the money winners and losers from 2023

From homeowners to drivers, who is finishing the year in a strong position and who has had a 12 months to forget?

It’s been another chaotic year, with all sorts of factors having an impact on our finances.

Here we highlight some of the big winners and losers from the events of the last 12 months.

Winners

Pensioners

The State Pension has seen some incredible growth in recent years. In April it increased by 10.1%, off the back of the extraordinary rate of inflation seen last year, while pensioners have also had confirmation that next April the State Pension will rise by a further 8.5% courtesy of wage growth.

The Triple Lock continues to deliver significant income boosts to older people, and with a General Election on the horizon it appears safer than ever.

Of course, even with these increases the State Pension is not going to be enough on its own to provide a comfortable lifestyle in retirement, but it certainly helps.

Savers

On the face of it, savers have had a brilliant year. The interest rates paid on savings accounts of all kinds have increased substantially in 2023 compared with what has become the norm in recent years, delivering a much more respectable return.

That doesn’t quite tell the whole story though. Inflation has been stubbornly high for much of the year, to the point that even securing a market-leading rate on your savings pot would not necessarily mean you beat inflation.

In other words, even with the top accounts your money could be losing value in real terms.

Thankfully inflation has dropped back now to the point that there are a few truly inflation-beating options, though there is also the prospect of Base Rate cuts next year which has meant that savings providers have begun trimming their rates.

So savers have just about ended the year on top, but need to be on their toes in order to continue to feel the benefits in 2024 and beyond.

Holders of Premium Bonds

Yes Premium Bonds are a sort of savings account, but it’s worth picking them out separately since 2023 has been a pretty staggering year for them.

Premium Bonds are special, since you don’t earn interest from them. Instead each bond you hold is entered into a monthly prize draw, with cash prizes for the winners.

And this year has seen a succession of hikes to the prize rate for bondholders, meaning not only more prizes overall but greater numbers of high value prizes too.

For example, in the first draw of 2023 there were around 4.8 million prizes, yet in the draw for December 2023 there were a whopping 5.8 million prizes handed out.

That’s a lot more savers landing some tax-free money every month.

Job hunters

It’s been another solid year for those looking for a new employer. Certainly in the early half of the year the shortage of good candidates meant workers were able to negotiate some cracking pay rises from bosses. 

While the balance is shifting back the other way, the reality is that if you’re in the market for a new role, there’s a good chance you’ll be able to negotiate a better package than you currently enjoy simply because bosses are so desperate to fill vacancies.

The taxman

It’s been a stonking year if you’re in the business of collecting taxes. 

It’s not a secret that the Government has been happy to employ stealth taxes, ensuring that we hand over more cash to HMRC without necessarily realising it, and it’s been a very successful tactic.

By freezing things like the personal allowance and the Income Tax bands, the Government has been able to increase the tax take without having to explicitly increase rates. As people’s incomes go up thanks to inflation, they move into higher tax bands, meaning more money heading to the Treasury.

According to the Office for Budget Responsibility between 2022-23 and 2028-29 there will be an additional four million people who move into paying tax on their income, while three million more move into the higher rate and 400,000 move into the additional rate.

Big energy users

Perhaps calling big energy users ‘winners’ is stretching it, but things certainly could have been a lot worse.

At the start of the year we had the energy price guarantee which acted as a brake on what suppliers could charge, alongside support from the Government which was paying £67 a month directly to our suppliers.

Once that support ended, the energy price cap once again came to the forefront, pushing energy bills below the levels set by the energy price guarantee ‒ where the guarantee meant typical household use would cost £2,500 a year, the price cap has since dropped to less than £2,000.

And while the price cap is due to rise again in January it will still be below the £2,000 mark. We have also started to see suppliers launch fixed tariffs once more.

So while our bills are still staggeringly more expensive than just a couple of years ago, the reality is that 2023 could have been even worse when it comes to energy costs.

The losers

Everyone

Let’s get this out of the way ‒ we have all taken a whack financially this year. While inflation has dropped, it is still much too high, and we are all paying the price.

Just take a look at the size of your supermarket shop compared with a couple of years ago, or the amount you’re paying on your phone bill. Most of us won’t have landed pay increases that will cover those increased outgoings on virtually every household bill, leaving us all having to work to make our money stretch further.

Drivers

It’s not been a great 12 months for motorists. While fuel costs today are not all that dissimilar from what you’d pay for a litre of petrol or diesel at this point in 2022, that doesn’t tell the whole story. 

Motoring bodies like the RAC and AA have accused fuel retailers of being too slow to pass on falls in the wholesale prices to drivers. In other words, as fuel costs go up these retailers quickly hike the price we pay at the pump, but as they have fallen the retailers have lingered with higher prices, pocketing larger margins in the process.

Investigations by the Competition and Markets Authority have also highlighted that this practice is going on, and while steps are being taken to address it, it’s coming too late for drivers who have already overpaid.

There’s also the small matter of car insurance, which has absolutely rocketed in price this year. The Association of British Insurers found that in the third quarter it hit an average of £561, up by a massive 29% on the same period of last year.

Mortgage borrowers

The mini-Budget may have taken place in 2022, but the earthquake it set off in the financial markets has been felt particularly keenly this year. And the mortgage market has felt those effects more than most.

The pricing of mortgages has increased dramatically over the last year and a half, leaving millions of borrowers paying much higher rates on their homeloans. That has inevitably led to plenty of potential homebuyers putting their plans on hold, but those who have to remortgage have had no such delaying option.

As a result, huge numbers have seen their mortgage outgoings jump, often by hundreds of pounds a month.

Home sellers

It’s not been a great year for those hoping to sell their property. Demand from potential buyers has taken a big knock from those rising interest rates, with estate agents reporting significant drops in the number of prospective buyers they have registered.

In years gone by the demand from buyers has helped push up house prices, but we have seen the opposite effect this year, with that lack of activity pushing prices down. Zoopla recently found that vendors are accepting a 5.5% discount from the asking price on average ‒ the equivalent of £18,000 in cash terms and the biggest gap in five years ‒ while sales are also taking longer. Rightmove reckons the time to find a seller has jumped this year from 45 days to 66.

Tenants

If you rent your home, chances are you’ve seen rent increase sharply this year.

The latest study from the Deposit Protection Service found that average rents rose in the third quarter of the year hit £1,120, up by 9.13% from the same period last year. That’s an above inflation rise, remember.

The situation is further complicated by the lack of choice. A host of landlords are selling up and leaving the market, for all sorts of reasons, and that is leaving tenants with fewer properties to choose from. And as demand outstrips supply, inevitably rents will be pushed up ever further.