But the charity legacy consortium Legacy Foresight says the rate of growth could vary depending on the Brexit deal
Charity legacy income could grow by up to 2.7 per cent a year over the next five years, Legacy Foresight has predicted, but the charity legacy consortium said growth could vary, depending on the strength of the Brexit deal.
Legacy Foresight’s latest market forecasts show that legacy income across the sector will grow from the current level of £2.82bn to £3.26bn in 2021.
This would represent an increase of 2.7 per cent a year, but would be less than 1 per cent a year after taking inflation into account.
But the consortium acknowledged that this was only one of a range of possible outcomes for legacies depending on the impact of Brexit. The most optimistic forecast suggests a 4.2 per cent annual market growth, but the most pessimistic prediction would see a growth of just 0.9 per cent.
This means a poor Brexit deal could result in legacy income being £500m lower in 2021 than it would be in a scenario where Britain negotiates a favourable deal, according to Legacy Foresight.
And the most optimistic prediction is lower than the average growth rate of 6.5 per cent a year in the five years leading up to the Brexit referendum.
But even the most pessimistic prediction meant legacy income would still be more than 5 per cent higher than it was last year, Legacy Foresight said.
Chris Farmelo, director of Legacy Foresight, said “The good news is that we do not expect to see a return to the situation after the global financial crisis in 2008, when sector incomes fell and then stagnated. In fact, the number of bequests received by UK charities is predicted to rise over the coming years, due to the climbing death rate.
“However, the value of those bequests will grow much more slowly than of late, due to the uncertain economic situation.”
Farmelo said the average bequest, currently worth about £46,600, would grow by just 1.3 per cent between 2017 and 2021, compared with 2.8 per cent in the preceding five years.
Chris Millward, chief executive of the Institute of Legacy Management, said the projected figures were “extremely interesting” given the level of confusion about what Britain’s exit from the EU might mean.
“While we hope that the central and optimistic forecasts for future legacies are closer to the truth, we are wary of the potential drop in legacy income, which will, of course, have a negative effect on our charity members and the good causes they support,” he said.