As the nation is ambushed with rising prices and no increase in pay it comes as no surprise that 40% of households have seen their budgets deteriorate between the months of July and August. This is in direct contrast to the 6% of Britons who have reported an improvement in their financial situation.
Quick drop in ready to use cash
The most recent Markit household finance index also revealed that consumers have suffered the quickest drop in their ready to use cash since the monthly survey started back in February 2009.
Markit have released the factors that have played their part in the fastest reduction in savings since March 2009. The figures have shown that income from employment fell for the eleventh month in a row with August showing the sharpest decrease in salary for the past nine months, another factor is that consumer spending power is in a chokehold due to increasing living and household costs.
The figures have shown a bleak outlook which is not confined to just one demographic, it affects all income groups, all ages, and all regions monitored by the survey. The figures from the survey have revealed a divide between the northern and southern parts of the country, with the north much more worse off.
Pressure on purchasing power unlikely to get better
With the figures showing that there has been a drop in savings and tighter household budgets then it is no surprise that the level of debt across the nation has increased for the fifth month in a row.
Research carried has shown that the pressure on purchasing power is unlikely to get better in the short term and it will get worse as the Bank of England is expecting inflation to rise to 5%.
“With consumer spending accounting for around two-thirds of UK gross domestic product, this does not bode well for the second half of the year. It is likely that the UK economy will be increasingly dependent on external demand.”