New forecasts suggest more dramatic decline in legacy incomes this year
Melanie May | 28 April 2020 | News
Legacy incomes could shrink between 8% and 27%, in 2020 by but will bounce back significantly from 2021 onwards, according to Legacy Foresight’s latest projections.
Legacy Foresight has updated its projections of the impact of the coronavirus on UK legacy incomes to take account of the latest available economic, demographic and administrative evidence.
All these factors have deteriorated since the last forecasts were produced at the end of March, with economic commentators generally more pessimistic than a month ago, a higher number of UK deaths than previously predicted, and the impact on solicitors, charities and government departments capacity to process charitable bequests more severe than previously assumed.
This suggests that there will be a more dramatic decline in legacy incomes over the coming year. However, the negative impact is expected to be relatively short-lived, and Legacy Foresight’s forecasts for the next five years continue to suggest market growth, with legacy incomes ending the five years 13% to 18% up on 2019 levels.
As in March, two alternative five-year scenarios for the UK legacy market have been developed. One is a relatively optimistic scenario, which assumes that the government’s Covid-19 response is more successful with the second more pessimistic.
Key findings
- Legacy incomes could shrink in 2020 by between 8% and 27%, but they will bounce back significantly from 2021 onwards.
- The average value of residual bequests could fall by 2-4% in 2020, although they will recover back to 2019 levels by 2022-2023.
- 5-10% of bequests that we would otherwise have expected to be notified in 2020 could be delayed due to administrative challenges, and up to a quarter of residual cash income will be deferred from 2020 to future years as a result of delays in selling property assets.
- Overall bequest numbers are likely to be around 0.5-0.8% higher over the next five years than pre- COVID-19 forecasts would have anticipated.
- Over the entire 5-year period, legacy incomes will be between 2% and 5% lower than pre-COVID-19 estimates.
- Legacy incomes are still expected to grow over the next five years, increasing from around £3.2bn in 2019 to £3.7bn-£3.8bn in 2024; a rise of 13%-18%.
Jon Franklin, Economist at Legacy Foresight, commented:
“These forecasts show a more dramatic decline in legacy income, especially over the coming year. But despite the enormous uncertainty and significant negative impact in the short term, it’s important to recognise that legacy incomes are still expected to grow over the next five years.”
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.