UK households suffer fastest drop in incomes for nearly 3 years

Monday, 19 December 2011 10:36

Households in the UK have seen their finances squeezed again, according to new research from Markit.

The Household Finance Index decreased to 34.6 in November 2011, the worst figure seen for four months and the second weakest since February 2009.

Some 38 per cent of households said their situation got worse over the month, while only seven per cent were able to say it improved.

This was blamed on the biggest fall in employment income since March 2009, as well as a rise in debt levels and a decrease in savings.

As expected, the lowest income groups experienced the worst deterioration, while the north-west of England was the most badly-affected by region.

In total, 49 per cent of respondents expect their financial situation to worsen in 2012, a lower outlook than at the same time in 2010.

Cash available to spend decreased for 41 per cent of households, but two-thirds of respondents said their spending had increased in December, pointing to more people getting into debt or dipping into their savings.

Markit senior economist Tim Moore said: "December's survey rounds off a year in which the
aftershocks of the recession have hit UK household finances with unprecedented force.

"Although a fall-back in inflation will help alleviate pressure on household finances next year, consumer sentiment looks set to remain subdued by a lack of improvement on the income side of household balance sheets."

Research carried out for the Joseph Rowntree Foundation in October found that the average middle-earning couple in Britain with two children will be £2,080 worse off in 2013 than they were in 2010, the Telegraph reported.

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