UK households´ financial strains worsen after referendum vote, Markit says
UK households´s financial perceptions worsened substantially in July following the EU referendum vote, although quickly rising wages and expectations of a cut to Bank Rate were acting as an offset, Markit said.
The survey compiler´s UK Household Finance Index fell from 44.8 in June to 44.3 in July, marking the second-strongest drop since January 2016 and showing that the Brexit vote had "badly affected" families´ views of their financial situation.
In parallel, workplace activity decreased for the first time since may 2012, as employers waited for the uncertainty to lift, Markit said.
However, income from employment grew at a survey-record pace and 56.0% of households now expected the Bank of England would lower Bank Rate, versus the just 8.0% who had anticipated such a move in June, while price pressures eased to their weakest in four months.
By sectors, only IT/telecoms and media/culture/entertainment employees noted an improvement in their financial well-being, with the rest reporting a decline.
The bleakest assessment came from retail employees.
By income brackets, the downturn was uniform in July, with even the highest earners downbeat about their financial situation, the HFI revealed.
Philip Leake, economist at Markit, said: “Markit’s latest HFI survey suggests that the Brexit vote has badly affected households’ views on their finances. With future prospects clouded by uncertainty, July data pointed to the worst financial outlook in two-and-a-half years.
“Household concerns also intensified as workplace activity fell for the first time since May 2012, with employers awaiting a clearer picture following the ‘Brexit’ vote.
“Worries about the future are at least being offset by some better news on wages and interest rates.
“Pay growth picked up to a survey-record high, indicating that the National Living Wage is feeding through to rising incomes."