Economic news

UK families’ budgets are under pressure again and it can get worse

British families are feeling the hardest pressure on the budget in the past several years, and the BoE seems to be going to increase interest rates which will worsen the situation, as shows a Monday survey.

IHS Markit’s data shows that monthly Household Finance Index dropped by 0.6 this month from 43.4 of August, however, it’s higher than the July’s 41.6. Overall current quarter shows the worst index figures since the year of 2014.

UK households have seen loss over growing inflation after the Brexit vote and little wage rise. People have less and less cash on hand to spend and the downfall is the fastest in the last three years, according to the survey.

Considering the BoE’s mounting desire to begin moving up interest rates, higher cost of borrowing and bigger mortgage payments will continue to exacerbate families’ financial state, IHS Markit’s Tim Moore said.

Previous week the Bank of England declared it could raise interest rates in the next few months if inflation pressure keeps piling up, which came as a surprise for many.

The survey demonstrated that households were not expecting such change of course by the BoE as well. As little as 29% of surveyed said they were anticipating rates increase in the following six months, and only 12% prior to the beginning of the next year.

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