LONDON (Reuters) - Britons’ finances deteriorated in April at a faster pace than in March as incomes fell and living costs rose, and households expected the squeeze to continue, reducing their ability to spend and support the economy.
Survey compiler Markit said on Monday that its headline Household Finance Index fell to 37.7 from 39.3 in March, sinking further below the 50 level that would mark no change compared with a month ago. That is the first drop in the index since December.
The index is not adjusted for seasonal influences due to a limited history of data.
Thirty-two percent of households said their finances worsened this month, while only 8 percent reported an improvement.
On future prospects, almost 42 percent expected to be worse off in 12 months’ time versus the 27 percent who thought they would have more money to spend.
“April’s survey highlights a deepening downturn in financial well-being, driven by renewed pressures on household income and another strong rise in living costs,” said Tim Moore, the author of the report, saying this was likely to undermine consumer spending in coming months.
The threat from high inflation was particularly striking: the index measuring inflation expectations for the year ahead rose to its highest level since the survey was first compiled more than four years ago, reaching 94.6.
Consumer spending, which generates about two thirds of Britain’s gross domestic product, is vital to the economy’s chances of meaningful growth after more than a year of stagnation.
The survey of 1,500 people was conducted between April 10 and April 15.
Reporting by Olesya Dmitracova; Editing by Ruth Pitchford