British households feel pre-Christmas financial squeeze

 
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The price of a shop has risen sharply this year (Source: Getty)

RITISH housholds reported a worsening outlook for their own finances in November, according to a well regarded survey published yesterday, adding to fears of a difficult Christmas for the UK economy.

The strain on UK consumers increased in the past month after a brief period of respite in October, according to data firm IHS Markit. Their household finance index fell back to a reading of 43.4 points, well below the 50 mark which represents a neutral state.

British consumers have been forced to contend with rising prices over the past year because of the dramatic devaluation in sterling after the EU referendum vote. Inflation reached three per cent in the year to October, while wages lagged well behind, according to government data.

Read more: Fears of UK retail nightmare before Christmas as footfall and spending dip

The figures add further to evidence of lagging consumer spending showing up in retail industry figures ahead of the vital Christmas period.

London households recorded the biggest decline in financial confidence, reaching its lowest level in more than five years.

Sam Teague, an economist at IHS Markit, said: “November’s survey signalled a further worsening of the UK household budget squeeze. The latest deterioration reflected a reduction in real wages in the face of rising price pressures and a consequent fall in disposable income.”

Meanwhile credit availability worsened during November at the fastest pace for more than two years, after the Bank of England raised interest rates at the start of the month, although overall spending increased.

Read more: Retailers braced for first Christmas sales fall for five years

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