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Financial household wellbeing deteriorates drastically in April in UK

Christian Fernsby |
The April findings from the IHS Markit UK Household Finance Index (HFI), which is intended to anticipate changing consumer behaviour accurately, is interesting.

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Topics: HOUSE    UK   

The HFI is compiled each month by IHS Markit, using original survey data collected by Ipsos MORI.

It is the first consumer survey published each month.

The headline index from the survey, the seasonally adjusted IHS Markit UK Household Finance Index (HFI) plummeted to 34.9 in April, its lowest since November 2011 and a sizeable drop from 42.5 in March.

This signalled the largest month-to-month drop in the index since the survey's inception in 2009 and was consistent was a severe decline in the financial health of UK households.

With a large degree of uncertainty surrounding the time frame to which the emergency public health measures will be maintained, financial wellbeing expectations also fell sharply.

Overall, the respective index signalled the strongest level of pessimism for almost eight-and-a-half years.

Survey respondents signalled a severe drop in workplace activity during April as a consequence of the lockdown.

The respective index fell by just over 16 points, indicating an unprecedented speed of decline in workplace activity.

Those employed in media, culture or entertainment sectors recorded the strongest drop in activity.

For the first time since October 2017, UK households reported a decrease in earnings from employment in April.

According to the latest survey data, incomes fell at a substantial rate that outpaced all previous reductions seen since the survey began in early 2009 by a wide margin.

Despite unprecedented support from the government to support businesses and their employees, job security perceptions plummeted in April, with the corresponding index pointing to a substantial degree of pessimism that was the greatest on record.

Those working in education, health or social care sectors were the least downbeat, while households employed in media/ culture/entertainment were the most concerned.

On the plus side, there were no signs of immediate stress on household balance sheets in April, despite the marked deterioration in earnings and overall financial conditions.

Debt levels held broadly stable when compared to March, while unsecured lending requirements rose at a rate that was below its long-run average as households dipped into savings.

Following the Bank of England's decision to reduce the base rate to an all-time low of 0.1%, there was little change to UK households' expectations.

The majority still anticipate the Bank of England's next move to be an increase, with precisely 63.5% foreseeing this within the next 24 months.

The proportion of UK households expecting the next move to be a cut rose marginally to 26.4%, from 24.0% in March.

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