Households ‘downbeat’ over financial situation

Consumers are continuing to feel the pinch as their financial wellbeing remains in question. 

The latest Markit Household Finance Index (HFI) for December shows that 29 per cent of respondents have seen their money situation get worse in the past four weeks, compared to only nine per cent who have witnessed an improvement.

People in the East of England were found to be the most downcast, followed by those from Yorkshire and the Humber.

Part of the problem facing consumers is they are being forced to deal with a rise in outgoings – recent figures from the Office for National Statistics show that households spent an average of £489 a week during 2012 – at a time when wages are stagnant. 

The HFI for December was 39.7 and this represents the second lowest value since April. With Christmas on the horizon, this situation could get even worse.

Tim Moore, senior economist at Markit, said: "While job insecurities have receded this year, the latest survey highlights that income and saving trends remain very subdued, especially at the lower end of the pay spectrum."

However, there is some hope on the horizon, as Mr Moore stated a rising number of consumers think the "squeeze on their finances" is going to subside next year. 

"The improving outlook indicates that strengthening domestic economic conditions have started to boost consumer sentiment," he commented. 

Households are also worried about the future of the economy over the course of the next 12 months, as there was an overall negative balance of five per cent (35 per cent versus 30 per cent). 

Those with debt concerns can use the new year as a chance to have a fresh start. For example, setting up a budget for 2014 – including some small financial goals – will give people something to aim for.

By Joe White