UK households’ financial health remained under severe pressure in May as coronavirus pandemic took its toll on employment and income, survey results from IHS Markit showed Monday.
The Household Finance Index, which measures households’ overall perceptions of financial wellbeing, came in at 37.8 in May, up only slightly from April’s eight-and-a-half year low of 34.9.
Although the headline rose from April, it remained among the worst seen since the survey began in 2009 and signaled a further sharp deterioration in the financial health of British households.
The future household finance index also indicated a strong degree of pessimism towards the outlook for financial health.
Households reported a further severe decline in workplace activity in May and incomes from employment fell drastically and at an accelerated pace.
Overall, the decline in incomes was the sharpest ever seen since data collection began in February 2009.
In April, job security perceptions plunged into deep pessimistic territory and the latest data revealed that perceptions remained at this level in May.
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, Joe Hayes, an economist at IHS Markit, said.
More than 50 percent of all survey respondents indicated a drop in household spending since April, with falling expenditure most widespread in the highest income brackets.
Further, there was a slight improvement in the proportion that anticipates the next move by the Bank of England to be an interest rate cut. Overall, the majority of UK households expect the BoE to lift interest rate within the next two years.
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