British households’ financial well-being in April was the lowest since late 2011 as job security perceptions sunk to a record low amid the lockdown imposed to slow the spread of the coronavirus, or Covid-19, pandemic.
The UK Household Finance Index, which measures households’ overall perceptions of financial well-being, dropped to 34.9 in April, it’s lowest since November 2011, from 42.5 in March, results of a survey by IHS Markit showed on Monday. A reading below 50 suggests a decline or deterioration.
This signaled the largest month-to-month drop in the index since the survey’s inception in 2009, IHS Markit said.
The monthly survey is compiled by IHS Markit based on monthly responses from approximately 1,500 individuals in Great Britain aged 18-64. The data is collected by Ipsos MORI and the online data collection for the latest survey took place between April 2 and 5.
“The UK Household Finance Index is already showing wide-reaching financial consequences of the lockdown measures implemented in late March,” IHS Markit economist Joe Hayes said.
“The latest data were compiled during the first week of April and therefore give an early indication of the severe impact on household finances from the public health emergency.”
The workplace activity sub-index dropped by over 16 points. The strongest declines were logged among those employed in media, culture or entertainment sectors.
Britons reported a fall in earnings from employment for the first time since October 2017. The speed of decline significantly outpaced all previous reductions seen since the survey began in early 2009, IHS Markit said.
The pessimism surrounding job security was the greatest ever in the survey history despite stimulus support from the government for businesses and employees.
Concerns were the least among those working in education, health or social care sectors, while worries were the greatest among those in media, culture or entertainment sectors.
Meanwhile, there was no reason for alarm on household balance sheets in April, despite the marked deterioration in earnings and overall financial conditions, the survey found.
Debt levels remained broadly stable versus March, and unsecured lending requirements rose at a rate that was below its long-run average as households tapped savings.
“Limiting the adverse impact on UK household balance sheets will be crucial in the coming months so that when economic activity does recover, consumers are not stuck repaying debts and instead are able to boost discretionary spending to aid a strong recovery,” Hayes said.
UK households hardly changed their expectations after the Bank of England cut the base to a record low 0.10 percent, the survey showed.
The majority continue to anticipate that the central bank’s next move will be a hike. Over 63 percent expects the increase to come in the next 24 months, while the share of those expecting further rate cut climbed to 26.4 percent from 24 percent.
Source: Read Full Article