Family budgets fall faster than during recession
Consumers’ household budgets are declining faster than during the recession, according to the latest Markit Household Finance Index.
The survey fell for the third consecutive month and reached its lowest point since it began in February 2009, when the country was at the peak of recession.
It showed a fall in available cash, income and savings during the period across all age groups, income groups and regions.
More than 40% of households saw their income fall, while only 6% reported an improvement in finances.
The Index also revealed that consumers are still unwilling to make major purchases as more than 50% of households said they were less likely to buy big-ticket items.
Tim Moore, senior economist at Markit says: “This squeeze on consumer purchasing power is unlikely to abate in the near-term, with the Bank of England expecting inflation to reach 5% later this year as higher utility and oil-related prices filter through to household budgets. With consumer spending accounting for around two-thirds of UK gross domestic product, this does not bode well for the economy in the second half of the year.”
The news comes as the British Retail Consortium (BRC) revealed further downturn on the high street as footfall fell 1% between May and July.
High streets and out of town shopping parks were harder hit than shopping centres, which reported a 0.6% rise during the three month period.
Stephen Robertson, director general of the BRC, says: “Fewer people are shopping because households are facing high inflation, low wage growth and uncertainty about future job prospects.”
