You are here: Home - Saving-Banking - News -

Household finances remain under severe pressure this month

0
Written by:
18/05/2020
UK households remain pessimistic about their finances as the coronavirus pandemic continues to weigh heavily on people’s purse strings.

The IHS Markit UK Household Finance Index (HFI) – which measures households’ overall perceptions of financial wellbeing – recorded 37.8 in May, up only slightly from April’s eight-and-a-half year low of 34.9.

While the headline number rose slightly, it remained among the worst seen since the survey began in 2009.

There was also a small rise in the Future Household Finance Index, although the figure showed a strong degree of pessimism towards the outlook for financial health.

UK households also reported a further severe decline in workplace activity during May.

The rate of decrease was unchanged from April’s record, with those employed in media, culture or entertainment sectors signalling the sharpest decline in activity.

Income from employment fell at the fastest rate on record in May.

Meanwhile, job security perceptions remained in deep pessimistic territory, with people in all industries negative about the outlook for job security.

On a positive note, there were little signs of stress on household balance sheets despite a further strong deterioration in earnings.

Debt levels held stable – as they did in April – while unsecured lending needs rose only slightly.

The avoidance of rising consumer borrowing was largely down to a rapid drop in household spending.

More than half of all respondents (51%) reported a drop in household spending since April.

Joe Hayes, economist at IHS Markit, said: “It is unsurprising to see further woe for UK households in May, with our UK Household Finance Index revealing that finances remained under severe pressure. The financial toll of the coronavirus pandemic and the consequent public health measures has been heavy, with recent survey data showing unparalleled declines in workplace activity and incomes from employment.

“It is also disconcerting to see so many survey respondents indicating concern towards job security, which could have a significant impact on consumer spending if the negative economic impact of the pandemic is protracted.

“Nevertheless, there still appears to be little stress on household balance sheets, although this partly reflected a survey-record slump in household spending during May.

“Debt levels were broadly unchanged and unsecured lending needs such as credit cards barely rose. The concern for the household sector remains the labour market, which will be vital in determining the speed at which consumer spending can return once the economy emerges from the lockdown.”

 

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week