Markit: Household finances at two-year low

| March 21, 2011 | 0 Comments

The Markit Household Finance Index has revealed that households are at their most pessimistic about their finances since March 2009 - when the country was in the midst of recession.

The gloomy report comes ahead of Wednesday’s Budget - when Chancellor George Osborne will unveil the Government’s 2011/12 tax and spending plans.

Meanwhile, Markit’s household finance index, which measures the change in a family’s financial situation compared to the previous month, dipped to 35.2 in March, from February’s 35.6 - a two-year low.

Expectations for the state of household finances in one year’s time also fell to 34.2 - an all-time low.

Markit attributed the declines on higher living costs, worries about unemployment and fears over the Government’s future tax hikes and spending cuts.

The results of the survey will continue to raise fears about the economic recovery as consumers rein in their spending in the face of higher inflation.

Consumer spending accounts for around two-thirds of economic output.

The Markit survey comes days after the Nationwide Building Society revealed a severe decline in UK consumer confidence for the month of February.

The building society’s consumer confidence index plunged to 38 in February – a fall of 10 points and the lowest level since records began in May 2004.

The latest fall means confidence is lower than at any time during the recession and way below the index average of 81.

Both surveys will put pressure on Mr Osborne to deliver a much-needed boost for consumers in this week‘s Budget.

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