The financial wellbeing of UK households fell more sharply than ever before in August, showed a survey published today.
A monthly report from IHS Markit on the financial state of Britain's households painted a gloomy picture of the UK, as the index, which measures households' financial confidence, fell more sharply than ever before, from 41.5 to 40.8 on the index.
The latest survey data highlight a continued strain on the finances of UK households, with the headline figure dipping in August as pressure intensified slightly.
The 12-month outlook for finances remained highly negative amid substantial uncertainty surrounding the economic impact of the COVID-19 pandemic.
Incomes from employment fell sharply again, while the survey's measure of job security perceptions remained firmly in negative territory as the winding down of the government's furlough scheme looms.said economist at IHS Markit, Lewis Cooper
The survey has been published monthly since 2011, to collect data which economists can use to predict how people will spend- or save- their money.
Projections from the Bank of England of a 7.5% unemployment rate by the end of the year appear to have stoked fears, as many households reported that they expected things to be worse, financially, this time next year.
Without taking into account unemployment rates, the Bank of England reported earlier this month that between 30-40% of UK households had lost income since the start of the Coronavirus pandemic.
This lines up with the latest findings from the IHS Markit survey, in which people reported feeling cautious towards spending, despite evidence that overall, spending had started to climb again compared to July.
The IHS survey hinted that, of the reasons people are reluctant to spend, one could be that fewer people have access to unsecured debts, such as credit cards and overdrafts.
Since the start of the pandemic, a 'saving spree' caused millions to pay down old debts, just as banks started to tighten up on lending criteria. The IHS report comes just days after another consumer survey by financial giant EY's 'ITEM Club' reported that the amount of money Brits borrowed on the likes of credit cards and personal loans was expected to dip to its lowest levels in over 25 years, due to cautious behaviour from banks and borrowers alike as the country searches for a way out of its economic crisis.
Overall, the data hint at some worrying trends when put in the context of the significant recession facing the UK. Although lockdown measures are looser; households are spending less, earning less and unsure about their jobs, all of which have the ability to add severe friction to the pace of the economic recoverySaid Mr Cooper
Taking everything into consideration, it is perhaps no surprise to hear that, compounding the survey’s dismal outlook, people reported feeling more uncertain about their financial futures this month than at any point since the 2011 financial crash.
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