Business

Home finances 'fell for 40% of households in August'

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Almost 40% of households saw their finances deteriorate between July and August, according to a survey by the financial information company, Markit.

The study, of 1,500 adults, showed finances worsened at their fastest pace since February 2009, in the middle of the last recession.

Many reported a rise in debt levels and a fall in savings and income.

Just under 6% of households reported an improvement in their financial situation.

Markit uses a Household Finances Index (HFI) which it said fell for the third month running in August to its lowest since it began compiling it in early 2009.

It said available cash to spend fell by its fastest pace since the survey began.

Savings fell at their steepest amount for almost two and a half years.

North-South split

August also saw the steepest drop in take-home pay for nine months, and this reduced income was then squeezed further by rising prices.

All income groups, age ranges and regions reported a worsening in their situation.

The south-east of England saw the slowest worsening of household finances, while the three northern English regions saw the fastest rates of deterioration.

Tim Moore, senior economist at Markit, said the downbeat findings reflected the wider global economic picture: "Recent events have made a week seem a long time in economics and August's survey is the first sign that the slew of downbeat headlines has knocked consumer sentiment."

He said the squeeze on people's purchasing power was unlikely to ease in the near-term, with the Bank of England expecting inflation to reach 5% later this year buoyed by higher utility and oil-related prices.

Separate surveys from the accountants ICAEW/Grant Thornton and the British Retail Consortium (BRC) also painted a gloomy picture.

ICAEW/Grant Thornton's latest UK Business Confidence Monitor showed business confidence fell to its lowest level since the third quarter of 2009, when the UK was still in recession.

The BRC's quarterly survey of footfall - which measures the number of people going to the high street and shopping centres - showed 1% fewer visited the shops in the past three months compared with a year ago.

Stephen Robertson, the BRC's director general, said: "Fewer people are shopping because households are facing high inflation, low wage growth and uncertainty about future job prospects."

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