Monday, October 22, 2012

British households uneasy about the future

UK household finances survey seems to be indicating and improving situation. However the expectations of finances a year out saw a sharp decline in October. British households have become very uneasy about their future.

Source: Markit Partners

Part of the explanation for weaker future expectations has to do with inflation expectations (similar to what we saw in India).
Markit: - Higher living costs were likely a factor placing pressure on survey respondents’ assessment of their future finances in October. Both perceptions of current inflation, and expectations for living costs in the next 12 months picked up since September.
Of course given the uncertainty around the UK economic growth trajectory (see post), job security continues to be a key concern. It is particularly pronounced in the public sector as the government attempts to bring the stubborn budget deficit under control (see post).
Markit: - There were also signs that worries about the wider economic outlook has led to deteriorating sentiment about future financial health. This was highlighted by job insecurities persisting in October and growth of workplace activity easing to only a marginal pace.
More than twice as many survey respondents (18%) reported worsening job security in October as those that indicated an improvement (7%). Lower levels of job security were recorded across all employment sectors monitored by the survey, with people working in Finance / Business Services indicating the sharpest deterioration. Overall, public sector workers pointed to a faster drop in job security than those employed in the private sector, and this divergence in sentiment widened slightly during October.
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