British households at the lower end
of the income scale are suffering disproportionately from the financial
squeeze, a report showed today.
Those
with incomes of £15,000-£23,000 are feeling in worse financial straits
than they have at any time in the last four years, Markit's household
finance index for February found.
Meanwhile, those earning below £15,000 recorded the sharpest deterioration in their budgets for 14 months.
Low income households have experienced a sudden
deterioration in their financial situation while those on higher incomes
have seen an upswing.
There is a growing gap between
lower and higher income brackets earners in the perception of financial
pressure: households in higher income brackets saw the deterioration in
their finances slow down, while the highest earners - on £57,751 and
over - saw the joint slowest squeeze on their budgets in a year.
The
overall financial situation facing UK households deteriorated once
again in the fourth quarter, according to a second study.
The
Alliance Trust Economic Research Centre said its Financial Reality
Index fell from 87.8 to 84.4, the lowest level since the second quarter
of 2012 and weaker than the long-term average.
Alliance Trust's UK Financial Reality Index dipped last last year having seen a recovery since mid-2011.
Financial pessimism among
British households appeared to be justified last week, when a surprise
fall in retail sales resurrected fears that the UK economy could be
tipping back into recession.
Freezing
weather made shoppers stay at home in January, according to official
data, which showed retail sales suffered a surprise 0.6 per cent fall
last month.
Analysts had expected the Office for
National Statistics to report growing sales at UK shops, and provide a
sign the country might avoid an unprecedented 'triple dip' recession by
registering higher economic output for the first quarter of the year.
Four
out of 10 households across the Markit survey expect their finances to
worsen over 2013, while around one quarter predict an improvement.
The
lowest earners were the most downbeat, with 57 per cent anticipating a
deterioration, while those on the highest incomes had a neutral outlook,
with similar numbers in this bracket predicting either a fall or an
improvement.
Markit's headline household finance index was unchanged at 37.7 in February.
Rising rents and food costs
have placed added pressure on families, while a string of energy
companies recently announced price hikes. Meanwhile, wages have remained
stagnant.
People
working in retail, construction, education, health and social services
tended to be the most downbeat about their finances, while those working
in IT and finance were the least pessimistic. Retail workers were the
most pessimistic about job security.
The
study also showed the sharpest deterioration in families' cash
availability since June last year, with 35 per cent of people reporting a
decline. More than twice as many households also reported a drop in their savings than those who saw a rise.
Overall,
the index was unchanged at 37.7 in February, which is well below the 50
mark which shows that families' finances are improving rather than
getting worse.
One third of households reported that their situation worsened during the month, while just one in 14 saw it get better.
Tim
Moore, senior economist at Markit and author of the report, said:
'There was no let-up in the squeeze on UK household finances during
February, as higher living costs and muted wage trends combined to
reduce cash availability at the fastest pace since mid-2012.
'Worsening
consumer finances are likely to further rein in spending on the high
street and to complete this circle latest survey data showed that retail
sector workers were the most downbeat about their job security and
workplace activity in February.
'The
lowest income households saw their financial situation move in an
entirely different direction to the highest earners in February.'
The monthly survey asked 1,500 people across Britain about their finances.
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