A survey of UK households has found that finances remained under severe pressure in May.
The IHS Markit UK Household Finance Index (HFI) measures households’ overall perceptions of financial wellbeing. During May it recorded a level of 37.8, which was only slightly up on the eight-and-a-half year low seen in April of 34.9.
While the headline number did rise, it remains among the worst seen since the survey’s inception in 2009 and signalled a further sharp deterioration in the financial health of UK households, the company said.
There was also a small rise in the Future Household Finance Index, although the figure remained indicative of a strong degree of pessimism towards the outlook for financial health.
UK households also reported a further severe decline in workplace activity during May. The rate of decrease was unchanged from April’s survey record, with those employed in media, culture or entertainment sectors signalling the sharpest decline in activity.
Detailed data indicated that the negative job security outlook was broad-based across all industries.
Debt levels held stable once again, while unsecured lending needs rose only slightly. The avoidance of rising consumer borrowing was largely achieved through a rapid drop in household spending, with this index falling to a survey-record low in May.
More than half of all survey respondents (51%) reported a drop in household spending since April, with falling expenditure most widespread in the highest income brackets.
Joe Hayes, economist at IHS Markit, said: “It is unsurprising to see further woe for UK households in May, with our UK Household Finance Index revealing that finances remained under severe pressure.
“The financial toll of the coronavirus pandemic and the consequent public health measures has been heavy, with recent survey data showing unparalleled declines in workplace activity and incomes from employment.”
It is also disconcerting to see so many survey respondents indicating concern towards job security, which could have a significant impact on consumer spending if the negative economic impact of the pandemic is protracted.”