What impact might the cost of living crisis in The UK have on cosmetic dentistry in 2023?
The world is at the peak of revolution, and as fast-paced as it may be, monetary circumstances have perpetuated an accelerated economy with hardly any disgruntled posts on social media. Not only is this an unbelievable statement in today’s strangulated economy, but it is also full of red herrings. No, our strategically curated global economy isn’t doing the best, especially in recent times.
Instead, we are now looking at a global economy that is experiencing what experts call “a broad-based and sharper-than-expected slowdown”, perpetuating a staged imbalance in managing financial risks as well as maintaining employment levels close to the economy’s natural rate. Therefore, it is no surprise that we are in the midst of turbulent headwinds and the world is being held in a death grip by the current financial crisis.
Global prices have risen to more than 8% on average throughout 2022, primarily instigated by the heinous wars imposed by Russia on Ukraine and reimagined by the lingering effects of the pandemic. These events have pushed many countries beyond their abilities to cope and have left the world economy in a fragile and stupefying state.
Recovering from crisis after crisis has been a challenge and unfortunately, has resulted in the utter annihilation of financial security in what the UN is now calling the “largest cost-of-living crisis of the 21st century”. Rapidly rising costs of food and fuel, chronic debt distress, and tightening financial conditions have affected both the most and least expensive cities in the world. The UK is no exception.
Everything from planning vacations to visiting their cosmetic dentist in this economical calamity has become a grave battle and there’s no sign of it slowing down.
Is there a cost-of-living crisis in the UK?
The UK is one of the wealthiest countries in the world – 6th in terms of GDP – with staggering wealth on its shores, however, this does not mean that individual households in the UK are just as financially secure. When you realise that nearly a quarter of the UK’s riches is held by 1% of its population, you can better comprehend that these metrics do not divulge the whole truth.
Estimates of the UK’s inflation projections against the “big four” Eurozone economies (Germany, France, Italy, and Spain) favoured an inflation rate of 4 to 6% in 2022. However, IMF’s latest forecasts have shown that inflation in the UK hit 7.4% over 2022 as a whole. Its annual inflation rate was also recorded to be at 11.1%, much higher than its comparable counterparts such as France (7.1%) but similar to the Eurozone average (10.6%) and Germany (11.6%).
An unnerving realization has therefore hit UK’s restful shores in that while many countries are feeling the squeeze of rising energy and cost-of-living expenses, price pressures in the UK are “expected to be worse and longer lasting”, according to The Telegraph.
Why is inflation worse in the UK?
Kristen Forbes, a former member of the Bank of England’s Monetary Policy Committee has warned that “there are about six factors that feed through into inflation and the UK hits every box”. Figures have been dizzying, revealing that inflation exceeded 9% in April – a level not seen since the 1980s.
This magnified impact of inflation can be attributed to a lethal combination of an extremely tight jobs market, staff shortages, tax raids and tariffs, and a weak currency. Petrol prices have increased by an average of 12.6p per litre between February and March. Household bills have also skyrocketed with almost 18 million households seeing their annual bill rise by an average of £693. According to the Office for National Statistics, 91% of adults in Great Britain reported an increase in their cost of living between October and November this year.
What is not helping the situation is that the UK government is now putting up taxes on households, something very few governments are daring to do at a time when the financial burden of soaring living costs is conspiring to cripple both households and businesses alike.
But why are the effects of inflation more pronounced in the UK? The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflammatory rates caused by inflation in the UK are much bigger than elsewhere but the effects may certainly be longer-lasting here.
How will the cost-of-living crisis affect the cosmetic dentistry industry?
Thanks to the most dramatic surge in inflation experienced in many 40 years, experts believe that household incomes might not start rising again until the second half of 2023 when inflation is expected to drop. We may not be able to see the economy return to current levels until 2024. In fact, many researchers believe that the UK may narrowly avoid a recession.
In all this chaos surrounding inflation and financial liability, dentistry is believed to undergo a massive change.
Shortage of workers
The most considerable effect inflation would have is on the recruitment and subsequent retention of dental professionals across the UK’s dental practices. Since the labour market is shrinking extremely fast coupled with the substantial increase in work-related costs, businesses are compelled to pay staff more money to attract the talent they need. Furthermore, employees may also suffer to bring in adequate finances to tackle commuting expenses.
Due to this, many committed health facilities are now struggling to recruit associates as most early career dentists continue to venture into the private sector. A recent report exposes a blatant shortage of candidates required to fill vacant roles in numerous dental practices. In addition, higher inflation expectations will also translate to the workers demanding bigger wage increases to offset the income shock. At a time like this, private business owners may not be able to readily increase wage prices. Indeed, average salaries have fallen for the first time this millennium further aggravating the already worsening economy.
Lesser patient visits
The UK’s NHS dentistry operates through the UDA system whereby UDA targets require to be completed. However, since we are receiving forecasts of inflation reaching 18%, it is safe to assume that a huge percentage of the population will not be able to afford NHS dental fees due to less disposable income. Thus, many practices may not be able to reach their UDA if the NHS continues to increase patient charges.
Latest data reveals that four in five (82%) of individuals are already being forced into making sacrifices in their spending habits, with one in four (25%) reporting that they have been cutting back on oral health products like toothpaste, mouthwash, and interdental brushes. One in three (31%) also reported to have not visited a dentist in over two years while one in four (25%) parents have had to spend less money on their oral health to look after their children’s teeth.
On average, it can be estimated that UK households spend £4.70 per week on oral health products, however, the majority (38%) spend as little as £2 a week. As the public becomes more conscious of their expenses, cosmetic dental visits may be one expense that may be put on the back burner.
Increased pressure on dental businesses
As can be expected with the inflationary contract uplifts, private dental practices may also face difficulty procuring materials and equipment and spending on energy bills. Meanwhile, NHS practices that have no other option but to regulate this increased cost may begin to tighten their belts and review their financial planning.
Most practices may opt to diversify income streams, potentially by specialising in certain treatments. The British Dental Association (BDA) has urged the government to implement a new NHS dental contract by 2023 to protect the service.
Despite the economic backdrop Impress are committed to an ambitious programme of expansion across the UK. We are opening several new orthodontic clinics in key locations around the UK in 2023. If you are an ambitious Dentist looking to work with world class technology, providing orthodontic solutions, please contact us for a confidential discussion about what we can offer for your career.