You are here
UK households feel the pinch as budget nears, Christmas sales seen down
[LONDON] British households felt more of a squeeze on their finances this month, a survey by data firm IHS Markit showed on Monday, and credit card firm Visa predicted spending over the Christmas holidays would fall in real terms for the first time since 2012.
The reports underscored the pressure on finance minister Philip Hammond to come up with measures in this week's budget to help voters cope with the rise in inflation and slow growth in their wages.
The IHS Markit Household Finance Index for November fell to 43.4, reversing some of October's improvement to 43.8. Respondents were their most pessimistic about the outlook for their finances since June.
"November's survey signalled a further worsening of the UK household budget squeeze," Sam Teague, an IHS Markit economist, said in a statement.
Mr Hammond has been urged by some members of his Conservative Party to use his budget to help households, despite the still fragile state of Britain's public finances.
The IHS Markit survey found the pace of spending growth by households slowed in November, possibly reflecting banks reining in their credit as well as the fall in spending power. The Bank of England has pressed banks to make sure they are not taking big risks with their lending to consumers.
Households perceived the fastest fall in unsecured credit availability since June 2015, IHS Markit said.
The survey was based on a poll of 1,500 Britons between Nov 8 and Nov 12.
Separately, Visa said its research predicted a 0.1 per cent fall in spending after adjusting for inflation during the Christmas holidays, the first annual fall since 2012, and a contrast from last year's increase of nearly 3 per cent.
Visa said it expected no change in spending in 2017 as a whole, the weakest performance since 2013.
Separately on Monday, a report by university academics said the impact of inflation due to last year's Brexit vote was costing the average worker 448 pounds (S$802) a year, equivalent to almost one week's wages when adjusted for rising prices.
"Ahead of Wednesday's budget statement from the chancellor, our findings show that the Leave vote has led to a sharp increase in inflation," Holger Breinlich, an economics professor of the University of Nottingham, a co-author of the report, said. "At a time of growing disenchantment with austerity, this is clearly unwelcome news for living standards across the UK."