UK households ‘to see worsening financial situation’

Some 43 per cent of households anticipate their financial situation will worsen in the coming year.

This is the stark finding from Markit Economies, which has released its Household Finance Index. It found that only 24 per cent are expecting to see an improvement in their circumstances, which could mean that debt help is required further down the line.

Public sector employees are much more downbeat about the situation they find themselves in than their private sector counterparts, but the squeeze is not going to be as bad as it was 12 months ago.

Tim Moore, senior economist at Markit and author of the report, said that households need to prepare themselves for another year of "squeezed personal finances" as job security continues to be a source of concern for people.

"With three-quarters of all households not expecting any improvement in their finances, the latest survey suggests that domestic consumer demand will remain under pressure in the near term, especially since inflation perceptions remain elevated and job insecurities are prevalent across the UK," he added.

However, Mr Moore observed the situation is not as bad as it was in 2011, even among workers in the public sector. He stated the underlying reasons for the current position are lower incomes and higher living costs.

Moving forward, cash availability and savings in December are going to suffer, as people do not have enough money to afford to be in a situation whereby they can put money aside.

Debt problems have been found to be worst in the 18 to 24 age group and so it is these people who could best benefit from the use of a debt management plan. The policy offers individuals the chance to bring their finances under control and reduce their monthly repayments, while still leaving money over for personal usage.

By James Francis