Research by financial information specialists Markit has indicated a large decrease in household income and a higher rate of debt for the month of August.
The news indicates the worst financial downturn within household finance since February 2009, which was the peak of the last recession.
The statistics for the past few months have been rather bleak, and the steady increase in spending costs for households due to the current financial climate has led to people having to take further measures to get by.
Such measures include not taking foreign holidays – or not holidaying at all – this summer, and at a time that is commonly associated with sunshine and relaxation (although the former has been admittedly lacking), people are still struggling to evade the grasps and restrictions of the economic downturn. In the most recent survey only 6% of households reported an increased spending for the month of August.
The predominant reason for such trends seem to be a decrease in the amount of take-home pay and income, coupled with the rising cost of day to living, amenities and commodities. These trends are not specific to any age range or group but there was a sharper drop in the north of the country and a steadier decrease in the south.
It appears that various factors have led to these statistics coming to fruition, but that with news like the Bank of England’s expected 5% inflation rate, spending was unlikely to increase at all and that the negative trends may well continue for the foreseeable future.
Other surveys have been conducted on similar subjects have reflected the trends highlighted by Markit, including the BRC (British Retail Consortium) releasing statistics showing that there had been a decrease of 1% in the number of consumers and visitors to high street shops and shopping centres.
Tim Moore, the senior economist at Markit, said of the recent statistical evidence that ‘August's survey is the first sign that the slew of downbeat headlines has knocked consumer sentiment’. This consumer sentiment is unlikely to increase in the coming months, and although spending will predictably increase around the Christmas period, the current economic climate will certainly take its toll.