UK legacy market growth set to improve over the next five years

Over the past few weeks, we’ve updated our forecast for the total UK legacy market, to reflect both revised ONS projections for the number of UK deaths and the latest economic forecasts, following the UK’s departure from the EU.

What’s in store

We anticipate that total UK legacy income will increase from £3.2bn in 2019 to £3.9bn in 2024, representing a growth rate of around 3.6% p.a. – and a more optimistic outlook than the 3.3% p.a. growth in our spring 2019 forecasts. The uplift is primarily driven by the significant upward revision in the ONS’s death forecasts (more on this here), reflecting a reduction in their expectations for future growth in life expectancy.

Although more positive than our previous forecasts, our analysis suggests that the legacy market will grow more slowly than the 4.1% p.a. we’ve seen over the period 2014-2019; when it was supported by both strong growth in the number of deaths and a relatively buoyant economy.

In comparison, growth in economic activity throughout 2020 and into 2021 is likely to be sluggish, due to ongoing uncertainty over the nature of the UK’s future trading relationship with the EU. In the near term, legacy incomes will be driven by the number of bequests rather than the average value of these bequests.

By the end of 2024, we expect the economy to have returned to the kind of performance seen over the last couple of decades. Combined with expectations of continued increases in the number of deaths, and the growing influence on death rates of the 1 in 5 women born in the 1960s that do not have children, longer-term prospects for the UK legacy market remain very positive – particularly when compared to other sources of fundraising income.

What does this mean for charities?

While charities have no influence over either of the key drivers of legacy income at the market level, they should act now to put themselves in the best position to take advantage of the expected long-run market growth.
In a highly competitive market, with significant in-built lags between investment and realising income, charities should be looking at their legacy fundraising budgets. Investment now could ensure they get their share of future growth.
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