Squeeze of UK household finances starts to relax

Julian Harris
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THE deterioration of household finances appears to be slowing, according to a survey released by Markit today.

While Britons remain pessimistic about their finances, the outlook this month was the least negative since January.

The household finance index edged up by half a point (to 36) in May, while the index measuring the financial outlook for the coming year rose by 2.6 points (also to 36). Nonetheless, figures below 50 still indicate a decline in respondents’ circumstances.

“May’s survey showed a small but encouraging rebound in households’ financial outlook, following a record low during April and declines throughout the first quarter of 2011,” commented Tim Moore of Markit, which compiles the data.

Workers reported a turnaround in job security, the index improving to 42, from 39.4 in April. In the private sector, the index jumped to 43.7, its highest since January.

Inflation perceptions slowed this month, after hitting an all time record high in April. Yet over four in five (81 per cent) still perceived a rise in prices, while only two per cent reported a reduction.