Second national lockdown hits household finances - survey

Household finances deteriorated in November, research showed on Monday, as ongoing lockdown restrictions across the UK continued to hit home.

The IHS Markit UK Household Finance Index - which measures households’ overall perceptions of financial wellbeing - eased slightly to a six-month low of 40.0 from 40.8 in October.

Savings declined at the quickest rate for seven years, IHS Markit found, while income from employment dropped "markedly". Job security perceptions recovered from lows seen earlier this year but remain "historically subdued" below the neutral 50.0 mark, it added.

As a consequence, the outlook remained negative, with UK households on average expecting their financial situation to worsen in 12 months’ time.

Lewis Cooper, economist at IHS Markit, said: "With stricter measures in force around much of the UK, the latest Household Finance Index data are not too surprising. Households recorded the most intense strain on their finances since May, amid worsening cash availability and the quickest drop in savings for seven years.

"The easing of lockdown measures will likely elevate some of the strain we saw in November, but until the economic recovery becomes much more sustainable, it is unlikely households will see much improvement in their financial situation."

This is the last time the Household Finance Index, which is compiled by Ipsos MORI and is based on responses from around 1,500 working-age adults, will be published monthly as it transitions to a quarterly series. The next index is scheduled for January 2021.