The IHS Markit UK Household Finance Index (HFI) – which measures UK households’ overall perceptions of financial wellbeing – signalled a further sharp deterioration in September.
At 40.8, unchanged from the previous survey period, the fall was less severe than that recorded at the height of the covid-19 pandemic in April and May. However, it was still indicative of a highly pessimistic outlook with regards to household finances over the coming year, with the weaker outlook being driven in part by a further reduction in the availability of cash and declining savings throughout the month.
Amid households with lower disposable incomes, the latest fall was the sharpest since December 2013, with some households turning to credit to finance their purchases.
Worryingly, but unsurprisingly given prevailing labour market conditions, households’ perceptions of job security remained extremely weak. The respective index dipped further into negative territory, registering at 39.9, as the economic impact of the pandemic continued to be felt in the jobs market.
Lewis Cooper, economist at IHS Markit, said: “September’s data also signalled reductions in household spending, savings and cash availability, all of which highlight the crunch on finances at present. As a result, UK households were the most pessimistic since May with regards to their financial wellbeing in 12 months’ time.”
