Britons’ finances take smallest hit since Dec 2010: poll

by Shelton on August 26th, 2012

filed under Finances

LONDON (Reuters) – Britons reported the smallest deterioration in their finances in 20 months in August, as their debt levels stopped rising and fears of being laid off eased, suggesting that consumers could yet be in the mood to help pull the economy out of recession.

Survey compiler Markit said on Monday that its headline Household Finance Index climbed to 38.9 from 37.5 in July. That is the highest since December 2010, but still well below the 50 level that would mark no change compared to a month ago.

Just under 30 percent of respondents said their financial situation worsened this month, while less than 8 percent reported an improvement.

Fewer consumers reported increased worries about their jobs, though they still outnumbered those who felt more confident. On balance, the index for job security reached the highest level since April when it was also 44.9.

Moreover, Britons expected the smallest deterioration in their year-ahead finances since March 2010, with manufacturing and construction workers the most pessimistic.

While the Olympics perhaps helped give a warmer glow to household morale, the breadth of improvement spanning debt trends, inflation expectations, incomes and job security points to a more fundamental easing of the financial downturn, said Tim Moore, senior economist at Markit.

The index measuring inflation expectations for the year ahead reached the lowest level since February, though the survey was compiled before official data showed an unexpected rise in consumer price inflation in July – to 2.6 percent from 2.4 percent.

Still, consumers remain fragile. Household spending rose at the slowest pace for five months in August, while both savings levels and cash available to spend fell faster than in July.

The survey of 1,500 people was conducted from August 9 to August 13.

(Reporting by Olesya Dmitracova; editing by Patrick Graham)

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