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The impact of the UK recession and welfare reform on mental health

Key messages

  1. The UK has experienced a prolonged economic downturn with rising unemployment and uncertain recovery since 2008.
  2. Economic crises increase the risk factors for poor mental health (poverty and low household income, debt and financial difficulties, poor housing, unemployment and job insecurity).
  3. There is evidence to suggest that the UK recession may result in an increase in mental health problems and lower levels of wellbeing, with a widening of inequalities.
  4. Welfare benefits in the UK are simultaneously undergoing significant reform.
  5. There is only a limited understanding of what constitutes effective action to mitigate the negative mental health and inequality impacts of economic decline.
  6. It is anticipated that effective mitigating action should involve active labour market programmes, family support programmes, control of alcohol prices and availability, primary care mental health services and debt relief programmes.
  7. Interventions proposed for NHS staff to achieve this include financial ‘first-aid’ training for health professionals, financial assessments integrated with routine health assessments and signposting with co-ordinated local action across health, social and financial services sectors, employability programmes.

Background to UK recession and welfare reform

The UK has been in recession since the banking crisis of 2007, resulting in low economic growth and rising unemployment. Whilst there is now some evidence that the recession may be coming to an end its effects are likely to continue for many years. Although there is limited research on the impact of the current recession on mental health, there is evidence from previous economic downturns to suggest that the UK recession may result in:

  • An increase in mental health problems, including depression (1),(2) and possibly lower levels of wellbeing (3)  
  • More suicides and suicidal behaviours (4),(5),(6),(7)
  • Increased domestic violence and child neglect8 with associated impact on child mental health and wellbeing (9)
  • Increase in drug and alcohol dependency. (10)

Projections anticipate a slow and uncertain recovery (11), particularly given the level of national debt. Whilst welfare benefits can act as a buffer to protect those detrimentally affected by the UK recession, the Welfare Reform Act 2012 (12) introduced the biggest changes to the welfare benefits system in 60 years (see Appendix 1 for details).  The changes are likely to have the greatest impact on the most deprived since those are the individuals who rely most heavily on benefits. (13)

The changes proposed are anticipated to make savings of £18billion to the welfare budget by 2014/1510 with further savings of £10billion suggested to come by 2016. Increased unemployment, combined with constricted social spending and higher levels of inflation than income growth is likely to result in a fall in income and the standard of living for many.  There is concern about the impact this will have on the mental health of the UK population.

Evidence for impact of the recession and welfare reforms on mental health

There are likely to be different impacts on mental health as a result of the reforms which include:


The links between unemployment and poorer mental health have been explained through the psychological effects of unemployment (such as stigma, isolation and loss of self-worth) and the material consequences of a reduced income. Unemployed individuals, particularly the long-term unemployed, have a higher risk of poor mental health compared with those in employment. 

Research indicates that every 1% increase in unemployment is associated with a 0.79% (95% confidence interval (CI) 0.16 to 1.42) rise in suicides for those less than 65.  A recent time-trend analysis study (14) of suicides in England suggests that around two-fifths of the recent increase in suicides among men during the 2008-10 recession may possibly be attributable to rising unemployment.

Job insecurity

During an economic downturn, those still in work but suffering from job insecurity, greater work demands, financial problems resulting from pay constraints and lack of control over their work situation may experience mental health effects that reduce productivity, through stress, anxiety and depression-related disorders. (15) Stress is now the most common cause of long-term sick leave in Britain with employers planning redundancies most likely to see a rise in staff mental health problems. (16) 

Stress in the public sector is becoming a particular challenge as a result of changes due to the scale of major change and restructuring. (17) Individual level studies show the adverse effects of anticipating job loss and job insecurity. The observation that suicides often rise at a population level before unemployment is suggested to be partly attributable to this (along with other factors such as rises in personal debt). (18)

Poverty and mental health

The Child Poverty Act of 2010 commits successive governments to the eradication of child poverty by 2020. The Act defines an individual to be in relative poverty if his or her household’s equivalised income is below 60% of the median in that year; and he or she is in absolute poverty if the household’s equivalised income is below 60% of the 2010-11 median income, adjusted for inflation. (19) The Institute for Fiscal Studies suggest that child and working-age poverty will increase across the UK over the next decade partly as a result of this recession. (19)

Debt and mental health

There appears to have been an increase in the number of people seeking debt advice in the UK since the start of the recession. (20) Borrowers can access credit in a positive way in order to access goods and services which lead to an improvement in quality of life and wellbeing.  However, debt may also be problematic for individuals and there is evidence of an association with mental health problems – the more debt they have, the more likely they are to have a mental health problem. (21) 

It is estimated that nearly one in two adults with debt also have a mental health problem whilst one in four adults with a mental health disorder is in debt. (21) Personal debt takes a variety of guises including mortgage and housing debt, consumer debt (credit cards and unsecured loans) and student debt. Although there is no conclusive evidence of a causal relationship, longitudinal studies provide plausible evidence that indebtedness is often subsequently followed by mental health problems but given the number of people with a mental health problem experiencing debt, reverse causality may also apply.

Housing and mental health

Adequate housing may be difficult to afford during an economic crisis and households may be forced to live in conditions that may constitute a risk to health, such as cutting back on heating to maintain manageable fuel bills. (22)  As income contracts and cost of living increases, more households will experience fuel poverty, spending more than 10% of its income on fuel to maintain an adequate level of warmth, increasing the risk of self-rationing and disconnection.  Living in a cold, damp home leads to higher risk of poor mental health in all age groups. (23)  Overcrowding can negatively impact children’s education, family relationships and physical, mental and emotional wellbeing. (24)

There is evidence that the UK recession has led to an increase in homelessness, The UK Government homeless statistics for the quarter April to June 2011 showed local authorities had accepted 11,820 applicants categorised as homeless - a 17% increase from the same period in 2010. Through housing market pressures, cuts in housing benefit and housing budgets alongside reforms in the Welfare Reform and the Localism Bills, it is feared the cumulative effects will almost certainly cause homelessness to increase further.

Increased pressure on health services

As a result of the reforms, health services are likely to come under increased pressure through:

  • Increased demand for GP consultations focusing on patient’s social and economic concerns (25);
  • Increased demand for psychiatric services (10);
  • More antidepressant and antipsychotic use and increasing self-medication with drugs and alcohol (26); and
  • Increases in A&E admissions due to alcohol and drug-related harm.

Who is most affected?

The current economic crisis is increasing poverty and will impact people on low incomes and vulnerable groups the most, including children, young people, single-parent families, unemployed people, ethnic minorities, migrants and older people. (8)

Does a recession have any positive impact?

The adverse effects of a recession is reduced where many people are members of social organisations such as trade unions, religious groups or sports clubs illustrating the protective effects of social support. In times of economic crisis informal social welfare can provide people with a place to turn to for support whether to borrow money, or to supply food or shelter or to get advice on sources of help.

The crisis may offer possibilities to strengthen social capital and to shift our value base from money to non-monetary components of life, provided that social protection is sufficient. A study in Iceland found as many people increased as decreased their happiness between 2007 and 2009, suggesting that some protective factors, like closer social relationships, have reduced the negative effect of the breakdown or that economic factors do not influence people’s wellbeing as much as has been suggested. (25)

Evidence based action to mitigate projected negative health impacts

Policy choices determine whether the economic recession will significantly affect mental health outcomes. Recession has less impact on the mental health of the population in countries with strong social support safety nets and recent data indicates that inequality in health does not necessarily widen during a recession in countries with good formal social protection.

The collated data indicate that social protection responses are crucial in mitigating mental health in the economic crisis. Governments need to target social protection interventions to address priority needs among the most vulnerable people, providing high coverage among the people with the lowest income and providing support for families at risk.

There is relatively little evidence of what works to mitigate the negative health impacts described.  However, recent data suggests that the mental health effects of economic crises depend on action in five key areas (8):

1. Active labour market programmes: including public employment services, resilience-building mental health promotion programmes for unemployed people, labour market training, special programmes for youth in transition from school to work and labour market programmes to provide or promote employment for unemployed people and people with disabilities. Studies indicate that such programmes, which provide group psychological support for unemployed people, promote mental health and increase re-employment rates.

2. Family support programmes: including support for the costs of children and other dependants as well as support for maternity and parental leave. In EU countries, each US$ 100 per person spent on family support programmes reduced the effect of unemployment on the suicide rate by 0.2 percentage points.

3. Control of alcohol prices and availability.

4. Primary care for the people at high risk of mental health problems: increasing access to mental health care and shifting the focus to preventing mental health problems and detecting them early.

5. Debt relief programmes: to help individuals to improve their financial situation and improve their mental health.

  • Further specific interventions proposed for NHS staff to mitigate the impact of the recession and welfare reforms include (10) (21):
    Awareness training for health professionals to enable them to discuss patient’s finances, provide information on welfare benefits and refer on to relevant agencies.
  • Financial assessments and signposting - becoming part of routine health assessments and where debt is reported, professionals should routinely assess for common mental health problems.
  • Co-ordinated local responses across health, social and financial services sector to facilitate early intervention with a view to protecting mental health.

This may entail service developments such as welfare advice on prescription and co-location of welfare rights advisors in NHS facilities.  Local public health teams should assess the need for interventions and consider relevant third sector organisations such as welfare rights advice, support groups, food banks and credit unions.

  • Employability actions such as development of primary care programmes to build problem solving skills and resilience.
Further resources on inequalities, recession, financial strain


1  Wang J, Smailes E, Sareen J, Fick GH, Schmitz N, Patten SB (2010) The prevalence of mental disorders in the working population over the period of global economic crisis. Canadian Journal of Psychiatry (Revue Canadienne de Psychiatrie), 55 (9): 598–605.
2  Lee S, Guo WJ, Tsang A, Mak AD, Wu J, Ng KL, et al. (2010) Evidence for the 2008 economic crisis exacerbating depression in Hong Kong. Journal of Affective Disorders, 126 (1–2): 125–33.
3  Davalso ME, French MT (2011) This recession is wearing me out! Health-related quality of life and economic downturns. Journal of Mental Health Policy & Economics, 14 (2): 61–72.
4  Stuckler D, Basu S, Suhrcke M, Coutts A, McKee M (2009) The public health effect of economic crises and alternative policy responses in Europe: an empirical analysis. The Lancet, 374 (9686): 315–23.
5  Stuckler D, Basu S, Suhrcke M, Coutts A, McKee M (2011) Effects of the 2008 recession on health: a first look at European data. The Lancet, 378 (9786): 124–5.
6  Tapia Granados JA, Diez Roux AV (2009) Life and death during the Great Depression. Proceedings of the National Academy of Sciences of the United States of America 13, 106 (41): 17290–5.
7  Ruhm CJ (2000) Are Recessions Good for Your Health? The Quarterly Journal of Economics, 115 (2): 617–50.
8  Anderson P, McDaid D, Basu S, Stuckler D (2011) Impact of economic crises on mental health. Copenhagen: World Health Organization European Office.
9  Hogarth T, Owen D, Gambin L, Hasluck C et al (2009) The equality impacts of the current recession. Research report 47. Manchester: Equality & Human Rights Commission.
10  Burton K, Higgins M, Mann L, Mackie P (April 2013).  UK Welfare Reform: final guidance for NHS Boards in Scotland on mitigating actions.  Scottish Public Health Network

11  The impact of the economic downturn and policy changes on health inequalities in London; University College London, Institute of Health Equity (2012).  
12 Welfare Reform Act 2012 
13  Lundberg O (2009) How do welfare policies contribute to the reduction of health inequalities? Eurohealth, 15 (3): 24–7.
14  Barr B, Taylor-Robinson D, Scott-Samuel A, McKee M. Suicides associated with the 2008-10 economic recession in England: time trend analysis. BMJ 2012;345:e5142.
15  Novo M, Hammarstrom A, Janlert U (2001) Do high levels of unemployment influence the health of those who are not unemployed? A gendered comparison of young men and women during boom and recession. Social Science & Medicine, 53: 293–303.

16  Winters L, AcAteer S, Scott-Samuel A (February 2012)  Assessing the impact of the economic downturn on health and wellbeing.  Liverpool Public Health Observatory.
17  CIPD. Absent management.  Annual survey report 2011. The Chartered Institute of Personnel and Development
18  Perlman F, Bobak M. Assessing the contribution of unstable employment to mortality in posttransition Russia: prospective individual-level analyses from the Russian longitudinal monitoring survey. Am J Public Health 2009; 99: 1818-1825. CrossRef PubMed
19  Browne J, Brewer M, Joyce R (2011) Child and Working Age Poverty and Inequality in UK: 2010. London: Institute for Fiscal Studies.
20  Mind (2012) Surge in calls show people need Mind more than ever.

21  Fitch C, Hamilton S, Basset P, Davey R.  Debt and Mental Health.  What do we know?  What should we do?  Royal College of Psychiatrists, Rethink, Money Advice Trust, FLA.
22  Kaplan G (2012) Economic crises: some thoughts on why, when and where they (might) matter for health – a tale of three countries. Social Science & Medicine, 74 (5): 643–6.
23  Geddes I, Bloomer E, Allen J, Goldblatt P (2011) The Health Impacts of Cold Homes & Fuel Poverty. London: Friends of the Earth & the Marmot Review Team.
24  Jones A (2010) Black and minority ethnic communities’ experience of overcrowding. Report No. 16. London: Race Equality Foundation.
25  Blane D, Watt G (2012) GPs a the deep end: GP experience of the impact of austerity on patients and general practices in very deprived areas. Glasgow: Deep End Steering Group.
26  Gudmundsdottir, DG (2013) The Impact of Economic Crisis on Happiness, Soc Indic Res, 110:1083–110

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