The financial situation in UK households has deteriorated at the fastest rate in three years.
The squeeze on UK household finances intensified in July, according to the IHS Markit Household Finance Index. At 41.8, down from 43.7 in June, the seasonally adjusted index was well below the 50.0 no-change mark and revealed the fastest deterioration in financial wellbeing since July 2014.
The Index, which anticipates changing consumer behaviour, showed that sharply rising living costs remained a key headwind for household finances in July as appetite for spending on major purchases such as cars, holidays and large household appliances dropped at its steepest pace since December 2013.
Job security also declined again in July, with subdued pay growth and greater living costs contributing to upward pressures on household debt and a further rise in demand for unsecured borrowing.
Tim Moore, senior economist at IHS Markit, which compiles the survey, says: “There are signs that squeezed household budgets and worries about earnings have started to spill over to consumer spending patterns.”
Mr Moore added that just 27 per cent of the households surveyed expect interest rates to rise in the next six months, the lowest proportion since October.
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If you would like to have a confidential discussion about any aspect of your personal financial situation or that of your business, contact Andy Pear or Mike Solomons at BM Advisory. Your initial consultation will be free of charge and without obligation, and we will discuss your individual situation and advise the best course of action. Alternatively, please contact your usual Beavis Morgan Partner.