Households struggling as prices rocket

 
Tim Wallace
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THE SQUEEZE on Britons’ finances is showing no sign of relaxing, according to a downbeat report by Markit, released this morning, thanks to job losses and soaring prices.

The outlook for household finances plummeted to its lowest level for six months, Markit’s index has shown.

The measure of people’s expectations for their finances over the next 12 months collapsed in October, coming in at 34.5, down from 42.2 in August.

All scores below 50 indicate a worsening in the situation.

Over half the respondents to the survey (54 per cent) expect their finances to deteriorate. Just over a fifth (22 per cent) forecast an improvement in their finances.

“Weak labour market conditions, combined with elevated inflationary pressures, have made rising debt and falling willingness-to-spend recurring themes this year,” commented Tim Moore, senior economist at Markit.

Price pressures continue to be a major worry for Brits, despite reassurances from the Bank of England that inflation will ease in 2012.

“Around 88 per cent of households anticipate a rise in their cost of living next year,” Moore reported, “While only 31 per cent of respondents forecast increased income over this period.”

The politicians’ mantra that “we’re all in it together” was partly vindicated by the poll, which showed deteriorating finances across every single income group and region.

However, there was some variation. The prospects for mortgage-holders are the worst in the survey’s history, with 59 per cent anticipate deteriorating household finances. Only 20 per cent forecast an improvement.

Public sector workers, too, are particularly downbeat. Sixty-three per cent expect their finances to get worse. Just 17 per cent predict improvements.