Households’ confidence in their financial situation plunged at the fastest rate in over a decade in April, as around one in three reported a drop-off in their employment income, according to an index.
The IHS Markit UK Household Finance Index (HFI) – which measures overall perceptions of financial wellbeing in the working age population – plummeted to 34.9 in April, its lowest reading since November 2011.
Readings above 50 indicate that people think their situation is improving and ones below this level suggest it is getting worse.
The reading fell back from 42.5 in March. This signalled the largest month-to-month fall in the index since the survey started in 2009 and was consistent was a severe decline in the financial health of households, the report said.
For the first time since October 2017, households reported a decrease in earnings from employment in April. According to the latest survey, incomes fell at a substantial rate that outpaced all previous reductions seen since the survey started in early 2009 by a wide margin.
Around one in three UK households reported a decline in income from employmentduring April, which was by far the largest number since the survey began in 2009.Joe Hayes, economist, IHS Markit
Workplace activity in April also declined at a record pace for the index.
People employed in the media, culture or entertainment sectors recorded the strongest fall in workplace activity in April.
The index said that despite Government support to businesses and employees, job security perceptions plummeted in April, to the most downbeat levels on record.
Those working in education, health or social care sectors were the least downbeat, while households employed in media, culture and entertainment were the most concerned.
On a brighter note, debt levels were broadly stable in April, compared with March, according to the index.
Joe Hayes, an economist at IHS Markit said: “Around one in three UK households reported a decline in income from employment during April, which was by far the largest number since the survey began in 2009.
“Nevertheless, we can still draw a small degree of positivity from the latest results, with overall measures of cash available to spend and household debt proving much more stable than workplace incomes.
“There was a slight pick-up in unsecured (non-mortgage) lending needs, while in some cases savings were depleted to meet immediate financing needs.
“Limiting the adverse impact on UK household balance sheets will be crucial in the coming months so that when economic activity does recover, consumers are not stuck repaying debts and instead are able
to boost discretionary spending to aid a strong recovery.”
Some 1,500 people aged 18 to 64 years old were interviewed by Ipsos Mori between April 2 and April 5 for the index.